Key management personnel at Franklin Templeton Asset Management, based in India, committed wrongdoings including insider trading, a forensic audit conducted by Choksi & Choksi finds. Managers redeemed personal investments for a profit before the company announced it had closed six debt schemes in April of this year, Moneycontrol reports.
“Clearly, it appears that a lot was going on in the back-end. If something is too good to be true, you need to look under the hood. This holds not just for investors, but even the board and trustees,” Amit Tandon, managing director of IIAS Proxy Advisory, said in an interview.
The firm also provided favors to companies it had invested in by not exercising put options, despite recommendations from the risk management committee to the chief investment officer to do so. The audit also found that the firm invested heavily in unlisted debt securities, which were mostly illiquid, and some of which were newly incorporated. The firm is already facing several investigations, including one by the capital markets regulator Securities & Exchange Board of India (Sebi), for closing debt schemes in an abrupt manner. 