CFMA hails HC verdict in FTMF case, to move SC for unit-holders’ interests

Chennai, Oct 24 : Hailing the Karnataka High Court’s verdict that upheld the rights of unit-holders of the Franklin Templeton Mutual Fund (FTMF), the Chennai Financial Markets and Accountability (CFMA), an investor’s protection organisation, said it would approach the Supreme Court to safeguard the entire interests of investors.
The Karnataka High Court has directed Franklin Templeton Mutual Fund to not proceed with the winding-up of its debt schemes without obtaining the consent of its unit-holders. It clarified that the consent of unit-holders as per the regulations is to be obtained before going through the winding-up process.
Stating that the half-battle was won wherein rights of unit-holders are upheld by the Karnataka High Court, Nithyaesh Natraj, the counsel for the CFMA, noted: “There are few areas which the court has not decided upon (which) may set a wrong precedent for the Mutual Fund Industry.” He pointed out that it has been rightly observed by the court that the SEBI has failed to be proactive in this case and reiterated that the CFMA would challenge the order in the apex court so that the entire interests of unit-holders are protected further.
“Leaving the fate of three lakh unit-holders at the mercy of trustees without knowing the content of forensic audit will set a bad precedent,” he added.
In a statement, the CFMA said the unit-holders would still be concerned that their fate is decided by the Trustees of Mutual Fund considering its lopsided structure. The Trustee Companies, which are merely formed with Rs 10 lakh capital, no full-time employees and annual outgo of few lakhs and which thereby lack independence, cannot be made responsible and accountable to decide upon the fate of the unit-holders, it said.