Franklin Resources Received Subpoenas. Franklin Resources Inc. said Monday it has received additional subpoenas from federal investigators in connection with the ongoing mutual-fund trading probe.
In its annual report filed Monday with the SEC, the mutual-fund manager said the U.S. Attorney for the Northern District of California, the U.S. Attorney for the District of Massachusetts and some foreign regulators have issued subpoenas.
Franklin said it’s providing documents and information in response to the subpoenas.
The San Mateo, Calif.-based fund company said in October that it had received requests for information from the Securities and Exchange Commission and the Attorney General for New York. The regulators have been investigating certain practices in the mutual fund industry, including late trading, market timing and sales compensation arrangements with brokers.
violation of securities laws
Market timing is rapid trading of fund shares designed to take advantage of short-term discrepancies between a fund’s share price and its underlying holdings. Such trading isn’t necessarily illegal, but regulators say that if mutual-fund companies with states policies against timing permitted such trades while profiting from them, that could be a violation of securities laws.
Franklin’s internal fact-finding inquiry has identified some instances of frequent trading by a few employees in their personal 401(k) plan accounts, according to the annual report.
The individuals include one trader and one officer of the funds, the filing said. Both employees have been placed on administrative leave and the officer has resigned, according to the filing.
Franklin said it hasn’t found any instances of inappropriate mutual-fund trading by a portfolio manager, investment analyst or officer. The company added, however, that its investigation isn’t complete.
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