Thread by @barandbench

Karnataka HC begins hearing a set of pleas related to winding up of six Franklin Templeton Mutual Fund Debt schemes. [DAY 3]

Chief Justice Abhay Shreeniwas Oka and Justice Ashok S Kinagi is hearing the plea.

#Franklintempleton

Senior Counsel Ravindra Shrivastava continues to make submissions (matters transferred from the Delhi HC)

#franklintempleton

Shrivastava: SEBI has completely failed in its role and duties and that is why we have come before your lordships.

#Franklin

Till 14th April, 2020, Franklin did not even think of winding up, says Shrivastava. He refers to a letter written by Franklin to SEBI on the said date. Letter also mentions that suspension of accounts (redemption) would be undertaken only as a last resort, he adds.

Shrivastava informs the Court that susbeqently, Franklin gave its proposal of winding up six of its debt schemes. These schemes are largely Corporate bonds. The reason they mentioned for winding up was the abnormally high rate of redemption.

Sole justification of Franklin for winding up is hightened redemption, he adds.

#Franklin

Shrivastava: To say that the heightened redemption was only because of COVID is completely unacceptable. The stress may have been caused due to a number of factors.

Shrivastava: SEBI said that it will not look into the winding up issue. The Trustee has decided it and it is final now. "Now everyone has to bow down".

#Franklin

Other mutual fund houses are not facing issue of short term liquidity crunch. Covid is a common factor for all.

Moreover, Franklin has wound up only 6 of its debt schemes, argues Shrivastava.

#Franklin

Shrivastava: Winding up was done in order to ensure that Franklin does not have to heed to the redemption demands.

#franklintempleton

Shrivastava: On May 25, the Petitioners raised a complaint with SEBI on winding up.

On May 27, SEBI ordered Forensic audit in to the whole affair.

One person from Rajasthan, via RTI asked for info on the forensic audit. SEBI replied that the said info is "confidential".

Shrivastava: "SEBI shall neither confirm or deny the investigation" reads the reply to the RTI letter.

This stance of SEBI is highly against transparency, senior Counsel adds.

#franklintempleton

Shrivastava: This can never be the intent of the legislature, to give complete power to Trustee for winding up. The legislation itself is for the protection of investors.

#franklintempleton

Hearing has come to an end. Next hearing on August 17.