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News Flash- Franklin Resources Eyes Revenue-Sharing Charges

Franklin Resources said in a regulatory filing that it may be in trouble from the state of California for revenue-sharing payments made to brokerage firms. California Attorney General Bill Lockyer told the company that enforcement action would be authorized, Franklin said. The news comes seven months after Lockyer announced a deep look into revenue sharing between mutual funds, including Franklin, and brokers.

Franklin is already in apparent trouble from the Securities and Exchange Commission for revenue-sharing agreements, and the firm even stashed aside $21.5 million in the second quarter to pay for what it called "anticipated settlement of governmental investigations concerning payments to securities dealers who sell fund shares."

The arrangements stem from Franklin apparently paying extra money to brokers for recommending certain funds.