Franklin Templeton directed by Supreme Court not to launch debt schemes till conclusion of case before SAT

Franklin Templeton directed by Supreme Court not to launch debt schemes till conclusion of case before SAT

Franklin Templeton on Monday was directed by the Supreme Court not to launch debt schemes till conclusion of the case before the Securities Appellate Tribunal (SAT).

Senior executive Vivek Kudva of Franklin Templeton and his wife Roopa Kudva, too, have told the SC that they will not deal in securities directly or indirectly till the SAT does not pass its final order in the case. In both cases, the top court has extended the time available to the Securities and Exchange Board of India (SEBI) to file replies by four weeks. The SAT has been directed to dispose of the Franklin matter quickly.

A bench of the Supreme Court helmed by Justice Abdul Nazeer said, "The public can't be cheated and the public should not be cheated."

A SEBI appeal challenging the SAT's interim order which had stayed the SEBI order that barred Franklin Templeton from launching debt schemes for two years was being heard by the bench.

The SAT's decision to stay Franklin Templeton's Asia Pacific (APAC) head, Vivek Kudva, and his wife Roopa Kudva, managing director at Omidyar Network India for allegedly indulging in unfair trade practices had also been challenged by the SEBI.

SEBI's curbs related to Franklin Templeton's decision to shut down six debt schemes in April 2020, which caused Rs 26,000 crore of investor funds to be stuck up for up to 10 months. An undertaking on behalf of Franklin Templeton was given to the top court by Senior counsel Harish Salve and Dr Abhishek Manu Singhvi. . SEBI was represented by Solicitor general of India Tushar Mehta and advocate Pratap Venugopal. For the Kudvas, Senior counsel Darius Khambata gave the undertaking to the apex court.

The asset manager had been asked to deposit Rs 250 crore into an escrow account and inform SEBI about it by the SAT. Thereafter, the Rs 5 crore penalty on Franklin Templeton would be stayed. The Kudvas also had been directed by SAT to keep the entire disgorgement amount in an escrow account and also deposit 50% of the penalty amount.

Both appeals of Franklin Templeton and the Kudvas against the SEBI order were listed by SAT for hearing on August 30.

Recently, the Supreme Court held that consent of a majority of unit holders was required for shutting down debt mutual fund schemes.