After falling prey to the infamous Karvy Stock Broking scandal in 2019, Ashok Ghose, a senior citizen from Pune, was feeling fortunate in April this year when he received his shares back right after months of efforts. “I had managed to get my corpus back by tweeting and making a noise and getting in touch with Mr Parthasarathy of Karvy Group. Somehow, he took pity on me and I got my shares back on April 20,” Ashok Ghose told TheSpuzz Online. Little did he know that a handful of days later, he would obtain himself in the middle of one more unprecedented economic occasion — Franklin Templeton shutting its six debt mutual fund schemes.
Hopes of relaxed retired life dashed
Ghose is amongst the lakhs of unitholders of the six debt mutual fund schemes that have been abruptly shut by Franklin Templeton India in April this year. “I’m a retired guy who put in a lot of my money in Franklin Templeton post-retirement, thinking it is a big name,” he stated. Ghose invested a substantial component of his holding in the Franklin India Ultra Short Bond Fund, some of it in the Franklin India Low Duration Fund and also in Franklin India Short Term Income Plan.
Debt funds, generally sold to retired persons by distributors, with an expectation of desirable returns and fixed earnings, also carry with them substantial threat — a truth generally ignored by these promoting and getting these funds. Ashok Ghose is not the only senior retired particular person who invested his cash in Franklin Templeton expecting fixed earnings as a retired pensioner. 73-year-old retired Army Major General Rajbir Singh Gill, who fought all wars for India considering that 1971, is also amongst the unfortunate unitholders. “I want to know if any other country in the world does this with its veterans,” he stated even though questioning the silence of SEBI, Finance Ministry, and even the Prime Minister on the Franklin Templeton fiasco.
‘Was about to redeem’
Having gone by way of the Karvy Stockbroking episode earlier, Ashok Ghose claims he was about to pull cash away from Franklin Templeton in March. “Back then Franklin Templeton had put Vodafone in a segregated portfolio. I was confident back then that Vodafone would not take away investor money,” he added explaining why he did not pull away from the schemes earlier.
On the other hand, Rajbir Gill was not so confident about the complete circumstance even right after the Vodafone securities have been placed in a segregated portfolio. He stated that he had attempted to take cash out of the schemes but was misled by the nearby distributor who advised him to hold his position till March 31. However, ahead of he could proceed with the redemption, the coronavirus lockdown was announced, bringing his plans to a halt.
: Franklin’s shut schemes get Rs 11,907 cr considering that winding up
Gill invested not only his cash in Franklin Templeton but his 96-year-old mother’s as properly. He concerns the move created not just by capital markets regulator SEBI but also the Supreme Court, which asked SEBI to provide the forensic audit report of the wound-up funds beneath a sealed envelope. “Who is the court protecting? Is it the investors or Franklin Templeton and SEBI,” he asked? “Fact remains that SEBI has lost no money, Franklin Templeton has lost no money, it is we who have lost money and nobody is protecting,” Gill added.
Franklin Templeton and Unitholders meet today
After Franklin Templeton was dragged to legal corridors, the Supreme Court ordered the fund home to seek the consent of unitholders for winding up the six schemes that it has currently shut down. However, unitholders have been asked to vote in favour of winding up or re-opening the schemes devoid of seeing the forensic audit report. Investors such as Ashok Ghose and Rajbir Gill see absolutely nothing very good coming out of the voting which ended yesterday.
“I don’t feel voting will make a difference,” Ghose stated prior to voting. Gill on the other hand says that even even though unitholders are not the guilty celebration right here, they have been told that if they do not vote in favour of closing the schemes they could drop cash. “Suppose I vote in favour of closing the funds, after months they come up to me and say that you invested Rs 1.5 crore of your life savings with us but we could only give you around Rs 70 lakh and rest is all lost,” The war veteran stated.
After today’s meeting involving unitholders and Franklin Templeton will submit the outcome of the vote to the Supreme Court which will resume the hearing of the matter in January.
CFMA bats for voting for reopening funds
The Chennai Financial Markets & Accountability (CFMA) a society working in investors’ interest lobbied to vote for re-opening of funds. Some tiny unitholders even though lauding CFMA’s efforts stated that it fails to see what harm reopening would do. CFMA, even so, says that voting No for winding up would outcome in reopening of the schemes but would not lift the ban on redemptions placed by the Supreme Court and reopening would lead to the apex court hearing the matter in totality.
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“The issue of the risk to the investment made by unitholders and the mismanagement of funds by the Franklin Templeton AMC and Trustees would not get delinked from each other if the matter – including the issue of redemption – is heard in totality before the decision is taken. Thus, the fear psychosis being created by the Franklin Templeton is intended to mislead unitholders,” CFMA stated. It is critical to note that CFMA or any of its workplace bearers do not have any exposure to Franklin Templeton Mutual Funds.
While calling the cause cited by Franklin Templeton to wind its funds up as a lie, CFMA stated that the fund home took benefit of the coronavirus aided circumstance even though no other mutual fund or any other Franklin Templeton schemes have been closed down.
Easing in investors to wind up the funds
Franklin Templeton had currently attempted to warn investors against reopening of the funds. In a letter addressed to the investors, Franklin Templeton stated that if unitholders vote against the order winding up, “the schemes may suffer significant losses due to the need to sell securities at distress prices to fund heightened redemption volumes,” it stated earlier this month.
Voting ‘Yes’ or ‘No’ does not imply a great deal for unitholders as they see no light at the finish of this gory tunnel. Investors such as Ghose, Gill and quite a few other individuals who did not want to be named but shared their troubles with TheSpuzz Online, really feel betrayed by a trusted economic institution, market place watchdog, the courts, and even the policymakers for their silence even though lakhs of investors have been deprived of their challenging-earned cash.