The Securities and Exchange Commission intends to bring civil charges against a unit of fund giant Franklin Resources and two of its senior officers over alleged short-term trading violations.
In a regulatory filing Monday, Franklin Resources, the fourth-largest U.S. mutual fund company, said it is trying to settle the action with the SEC. It could not estimate the likely cost of any possible settlement.
“Such discussions are preliminary and the Company cannot predict the likelihood of whether those discussions will result in a settlement and, if so, the terms of such settlement,” Franklin Resources said in the filing.
Last week, Massachusetts regulators accused the San Mateo, Calif.-based fund company of allowing a wealthy client to make short-term trades in Franklin-Templeton funds in return for a $10 million investment in a Franklin hedge fund. Read more.
The civil fraud suit alleges that former Franklin senior vice president William Post, who resigned from the San Mateo, Calif.-based firm in December, stuck a deal with Las Vegas investor Daniel Calugar that permitted frequent “market-timing” trades in Franklin stock funds.
Franklin Resources is also under investigation by the New York Attorney General and the Florida Department of Financial Services.
It said it is providing documents in response to all the subpoena requests.
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