Franklin: SEC Civil Charges Pending

February 9, 2004 ( - Franklin Resources and two of its senior officers apparently face US Securities and Exchange Commission (SEC) civil charges over alleged market timing, the fund company said in a regulatory filing.

Franklin Resources, the fourth-largest US mutual fund company, said it is trying to settle the action with the SEC, CBS MarketWatch reported. “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.The civil fraud suit alleges that former Franklin senior vice president William Post, who resigned from the San Mateo, California-based firm in December, struck 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.

Additionally, a recent news report indicated that Franklin’s scandal woes may be more widespread than just related to one investor (See  Report: Franklin’s Trading Problems Worse than First Thought ).