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News Flash- Franklin Fires Back at Feds Over Rapid-Timing Trades


Franklin Resources last week said that improper trading of its mutual fund shares were isolated incidents that do not reflect widespread company abuses and didn't harm long-term shareholders.

The company was responding to Massachusetts regulators and SEC charges alleging it allowed one of its clients to market time $45 million in its mutual funds in exchange for a $10 million investment in one of its hedge funds. Additionally, at press time, the firm said the SEC is considering an action against two senior officers and one of its units.

While admitting that William Post, the president and chief executive of the northern California region for Templeton/Franklin Investment Services, struck a deal with a hedge fund investor promising different-than-usual terms, Franklin Resources said it rejected the arrangement and placed the officer on administrative leave. Post, who had allegedly cleared the way for wealthy Las Vegas investor Daniel Calugar of the now defunct Security Brokerage to participate in market timing, left the company in December.

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