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
(1/n)

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
(2/n)

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

India:
No advance noticce
No choice to redeem

(3/n)

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

(4/n)

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

(5/n)

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

(6/n)

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

(7/n)

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

(8/n)

FT Fiasco Thread:

Q: Arre, Globally courts are fast. India they will delay the entire process and my money
Ans:
(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
(9/n)

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?

(10/n)

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.

(11/n)

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

(12/n)

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

(13/n)

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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