Franklin Templeton Fiasco

Thread on winding up of 6 Mutual Fund schemes of Franklin Templeton in Inda

Exactly 2 mths ago i.e. on 23April, FT announced winding up of 6 debt schemes, abruptly (without advance info to investors)

Thread answers some Qs and global parallels
FT Fiasco Thread

Q: Do globally funds wind down

Ans: Yes. Mutual Funds are also globally allowed to wind down by Regulations

Q: What the difference in what happens globally Vs. what FT did in India
Ans: Many difference. Wind down globally has defined regulations
FT Fiasco Thread

Q: Tell us how does a MF wind down globally and difference with what happened here

Ans: Globally,
Funds have to give advance notice to investors
Prior to wind down investors can redeem or switch

No advance noticce
No choice to redeem

FT Fiasco Thread

Q: Globally can the mutual fund say that they will wind down and return the money as and when possible

Ans: NO. Globally, the Mutual Fund has to give a date - usually not more than 45 days away - by which they will have to return all money to investors

FT Fiasco Thread

Q: That means globally MFs are held accountable even in a wind down

Ans: Yes, they are accountable - and these statement of best efforts basis and statements of good intent ("We want to return ur money, but can't tell u when) are not acceptable

FT Fiasco Thread:

Q: Oh so if MFs globally have to give option to redeem before wind down and then a specific date when winding up has to be completed, they must be doing fire sale and returning only 50-60% of assets

Ans: NO. They are held accountable to investors

FT Fiasco Thread:

Q: So y in India, FT is saying that they will try on best effort basis will return money and not a specific date

Ans: SEBI regs are unclear and giving them this leeway

But if FT is a global fund house, they should hv followed global norms in India too

FT Fiasco Thread:

Q: Is going to Courts in such case desirable/allowed?

Ans: Ideally, SEBI and FT should not have taken an anti-investor decision - in violation of all global guidelines of wind down

Going to courts is an option. And even globally investors go to Court

FT Fiasco Thread:

Q: Arre, Globally courts are fast. India they will delay the entire process and my money
(a) In such matters (impacting lacs investors), Indian Courts are as speedy as global
(b) Going to courts is a decision and expense, u have to decide for urself
FT Fiasco Thread:

Q: But my money is stuck, till courts decide

Ans: Hon'ble SC has given a time line of MAXIMUM 3 mths to decide

Remember,for almost 45 days after 23April there was no progress on update of wind down by anyone

Can't u give 90 days to court?

FT Fiasco Thread:

Q: But I don't want to go to court, I just want my money back. FT Ultra Short has now almost 7%-10% available

Ans: Some people are telling u that Courts will block ur money. Judges are not fools, pls understand they will not block ur money.

FT Fiasco Thread

Q: So FT did not follow any global norms of wind-down in India. But they are willing to give my money back.

Ans: Yes, No way that they can hold your money. MFs are a Trust. They cannot withhold back ur money and they have to give it to you

FT Fiasco Thread:

Q: FT also got back interest from Vodafone and gave it back

Ans: There was no special attempt made by FT. Vodafone paid to everybody - all MFs. And all MFs paid back to investors.

There is no special favor u got. It was a standard process

FT Fiasco Thread:

Q: Why is SEBI not holding FT accountable to global norms

Ans: SEBI can only hold FT responsible to SEBI Act. FT being a global organisation, has to hold itself responsible to global norms and guidelines. Otherwise what is the point

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