The Supreme Court on Tuesday directed SBI Fund Management, the agency distributing proceeds of the six wound-up schemes of Franklin Templeton Asset Management (FT), not to disburse 534 crore still left with it till further orders. While issuing notice to Sebi, FT and others on an impleadment plea by financial advisors and distributors of these six debt schemes, a bench comprising Justices S Abdul Nazeer and Sanjiv Khanna said that it will be best if further disbursal is halted for the time being. Seeking a direction to the SBI Fund Management to disburse their commission dues to the tune of
19 crore, Foundation of Independent Financial Advisors, comprising 1,400 distributors, told the apex court that while dealing with the issue of winding up of the schemes, no provision was made to safeguard the interests of the distributors who are directly affected and deprived of their rightful commissions. Franklin Templeton case, supreme court, SBI Fund Management, Franklin Templeton MF debt schemes, Franklin Templeton Trustee Services, supreme court
According to the distributors body, FT has held back about 78 crore as commission to be paid to about 8,000 MF distributors and out of this around
19 crore is payable to its 1,400 members. “As per the information… after disbursing a sum of around 26,098 crore, the asset under management as on March 15, 2022, is about
1,282 crore,” it added.
Senior counsel Arvind Datar, appearing for Sebi, argued that it was not opposed to distributors getting their fee or commission till April 22, 2020. The six MF debt schemes were wound up on April 23, 2020, in the wake of the first Covid-19-induced lockdown.
Senior counsel AM Singhvi, appearing for FT, told the judges that till date the amount paid back to investors is `26,098 crore, which is 103.5% of the aggregate assets under management (AUM) of the schemes at the time of winding up on April 23, 2020. Moreover, the cash component is far higher than the NAV at the time of winding up of the schemes, he reiterated.
Meanwhile, the case before Securities Appellate Tribunal, which is hearing Franklin Templeton Trustee Services’ appeals against the Sebi order that penalised the fund house is coming for hearing on April 25.
The apex court had in December 2020 permitted Franklin Templeton Trustee Services to hold meeting with unitholders of six debt schemes that the company proposed to wind up on April 23 citing difficulties in the bond market conditions due to pandemic. In a big relief to over 300,000 investors who were affected by the winding up of these debt mutual fund schemes, the apex court had on February 2, last year entrusted the SBI Mutual Fund to carry out the exercise for disbursement of the money to the investors of the six FT Mutual Fund schemes in “proportion to their respective interest in the assets of the scheme” within 20 days. An “overwhelming majority” of unit holders had voted in favour of winding up of the schemes.