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3 Minutes to Read by 3 Minutes to Read by 3 Minutes to Read by 3 MUMBAI, India (Reuters) – According to a document, a senior executive of American money manager Franklin Templeton (FT) told an Indian appeals panel that the country’s market watchdog “overstepped” its powers when it barred him from the securities market for unfair trade practices. The Securities and Exchange Board of India (SEBI) logo is seen on the façade of its headquarters building in Mumbai, India, on March 1, 2017. REUTERS/File Photo/Shailesh Andrade The Securities and Exchange Board of India (SEBI) barred Vivek Kudva, the head of Asia Pacific distribution at FT, last month, alleging that he and his family members used non-public information to sell holdings worth about $4 million in Franklin debt funds that were shut down weeks later, causing investor panic. Kudva stated in an appeal to the Securities Appellate Tribunal that while Indian law forbids unfair trade practices, mutual fund redemptions are not a “transaction” and are comparable to withdrawing one’s own money from a bank. Kudva stated in a statement that he had always behaved in compliance with Indian regulations and that his “personal transactions” had been “conducted in good faith and with no purpose to obtain unfair benefit” when approached on Thursday. SEBI did not respond to a request for comment right away. Kudva and his wife were given a one-year market restriction and a $1 million punishment by the regulator. It was not “fair conduct,” it said, because Kudva had access to non-public information. According to his 232-page filing, which was seen by Reuters but is not public, Kudva argues that SEBI’s decision “to justify the harsh orders and restrictions” was based solely on public facts. SEBI had “overstepped its power and abused the discretion,” according to Kudva, a former HSBC executive who has worked at FT for more than 15 years. The panel will hear his appeal later on Thursday. The filing comes as FT India is embroiled in a broader legal battle with SEBI after the fund house, which is considered a fixed income heavyweight, was barred from launching any new debt schemes for two years following a probe into the closure of six credit funds in 2020, which found “serious lapses and violations,” according to the regulator. After hearing Franklin’s appeal, the securities tribunal put the SEBI ruling on hold this week, but it nevertheless ordered the fund firm to deposit approximately half of the $68.5 million it had been requested to repay. The fund company stated in its appeal filing, obtained by Reuters, that it behaved in the best interests of investors and followed Indian legislation in winding up the funds, and that it had transferred approximately three-quarters of the assets to unitholders by mid-June. FT used “business judgment in good faith” to close the funds, according to the submission, and should not be penalized for it. Franklin Resources Inc.’s Franklin manages more than $8 billion for more than 2 million people in India, and the company has stated that it is dedicated to the market. Abhirup Roy and Aditya Kalra contributed reporting, and Muralikumar Anantharaman edited the piece./nRead More

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