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SAT stays SEBI order on Vivek Kudva

Our Bureau Mumbai | Updated on July 09, 2021

Regulator had banned Vivek Kudva, Rupa Kudva in Franklin Templeton case

The Securities Appellate Tribunal has stayed SEBI order banning former head of Franklin Templeton Asia Pacific Vivek Kudva from capital market for selling off his investment in Franklin Templeton scheme just before it suspended trading in the six debt schemes last April.

Last month, SEBI had directed Vivek Kudva and his wife Rupa Kudva to transfer ₹30.70 crore of redeemed FT units to escrow account within 45 days. The regulator had also barred them from accessing the securities market for one year and fined them a total of ₹7 crore.

However, the Appellate Tribunal had directed Kudva to deposit 50 per cent of amount in an escrow account.

In an appeal filed with the SAT, Kudva argued that Indian law prohibits unfair trade practices, but mutual fund redemptions were not a ‘trade’ and were akin to withdrawing one's own money from a bank.

SEBI said the redemption of investment was not “fair conduct” as Kudva was privy to non-public information.

Last week, SAT also stayed SEBI penalty on Franklin Templeton for closing six open ended debt schemes abruptly.

SEBI had levied a penalty of ₹5 crore and ordered to disgorge ₹512 crore advisory fee charged by Franklin Templeton India for managing the six suspended schemes.

The direction to deposit about ₹512 crore appears to be excessive at this stage, SAT said. “We direct Franklin Templeton to deposit ₹250 crore in an escrow account within three weeks from today,” it said. The Appellate Tribunal also stayed the two-year ban imposed by SEBI on Franklin Templeton from launching any new debt scheme.

Published on July 01, 2021

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