Franklin Templeton Settles State, SEC Charges
Family agrees to make regular reports to its boards on shelf-space payments.
Franklin Templeton's recent settlements with the California attorney general, SEC and the state of Massachusetts contained some new revelations about the extent of market-timing and revenue sharing at the fund complex, but not enough to change our opinion of the firm. Investors can still proceed with caution at the family.
On Dec. 13, 2004, Franklin agreed to pay $20 million in penalties to settle SEC charges that the fund family failed to adequately disclose to its boards and shareholders that it paid marketing costs by funneling securities trades to brokerages that were pushing Franklin Templeton funds. Franklin voluntarily swore off the practice, known as directed brokerage, a year ago, and did not admit or deny wrongdoing in the settlement.
Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.