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Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market: Case of Franklin Templeton India

Summary:
The sudden melting of FT India debt Mutual Funds was more than just a meltdown. SEBI recently released a order implicating one of its directors for selling off his and family’s investments in the said mutual fund schemes: The issue that arises for consideration in the present matter is whether the redemption of units in some schemes of a mutual fund by a director of the Asset Management Company of the Mutual Fund, and his immediate family, at a time when the said schemes were facing significant redemption pressure (the schemes were later wound up) and the director was allegedly in possession of material non – public information relating to the same, would fall within the scope of ‘fraudulent’ or ‘unfair trade practice’ as defined under the SEBI(Prohibition of Fraudulent and Unfair

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The sudden melting of FT India debt Mutual Funds was more than just a meltdown.

SEBI recently released a order implicating one of its directors for selling off his and family’s investments in the said mutual fund schemes:

The issue that arises for consideration in the present matter is whether the redemption of units in some schemes of a mutual fund by a director of the Asset Management Company of the Mutual Fund, and his immediate family, at a time when the said schemes were facing significant redemption pressure (the schemes were later wound up) and the director was allegedly in possession of material non – public information relating to the same, would fall within the scope of ‘fraudulent’ or ‘unfair trade practice’ as defined under the SEBI(Prohibition of Fraudulent and Unfair Trade Practices)Regulations, 2003.

Do we have similar such Mutual Funds cases earlier as well?

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

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