The Enforcement Directorate is conducting searches at some places linked to asset manager Franklin Templeton and its former and current executives as part of a money laundering investigation, officials said on Thursday.
The federal agency is looking to gather more evidence as part of its investigation against the company and its promoters under the Prevention of Money Laundering Act (PMLA).
Office and residential premises in Mumbai and Chennai are being searched, they said.
The company said it was cooperating with the investigations.
“We continue to cooperate with all regulatory and statutory authorities and provide all data and information required by them. Franklin Templeton places great emphasis on compliance with regulations, and we have appropriate policies in place, consistent with Indian regulations and global best practices,” Franklin Templeton said in a statement.
In November 2020, capital markets regulator Sebi issued a show-cause notice to the company following its April 2020 decision to wind up six debt schemes having Rs 25,000 crore of assets under management (AUM) from 3 lakh investors, citing liquidity challenges because of the pandemic.
Eventually, the company was asked to pay Rs 5 crore as a penalty, return over Rs 450 crore collected as 22-month investment management and advisory fees, and was banned from launching new debt schemes for alleged irregularities in running the six debt schemes.
The Chennai police’s Economic Offences Wing (EOW) subsequently registered an FIR to probe these alleged irregularities. The ED case of money laundering stems from this complaint.
The company said that in reference to the six schemes under winding up, as of March 16, 2023, these schemes have already distributed Rs 26,931.27 crore to unitholders, amounting to 106.81 per cent of the aggregate reported AUM value as of April 23, 2020, across the six schemes. “The total amount disbursed so far ranges between 99.32 per cent and 112.46per cent of the respective reported AUM values of the six funds as of April 23, 2020.” “At the time of each distribution, the Net Asset Value of each of the schemes was higher than it was on April 23, 2020. Further, five of the six funds have returned over 100 per cent of the AUM at the time of the winding up decision on April 23, 2020,” it said in the statement.
Four out of six schemes have liquidated all performing securities and there is only one issuer with three performing securities remaining to be liquidated in the other two schemes. The AMC is continuing to support the ongoing liquidation process by a third-party liquidator, Franklin Templeton said.
In 2021, Sebi restricted the heads of the asset manager — Vivek Kudva and Roopa Kudva — from accessing the securities market and from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for one year.
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