Franklin Resources Inc.s legal problems were extended Thursday to the tune of a massive class-action lawsuit filed by California investors stemming from market-timing issues.
Filed by law firm Milberg Weiss Bershad Hynes & Lerach, the suit alleges Franklins fund managers permitted favored clients to time a number of its funds at the expense of long-term shareholders.
Investors in Nevada have filed similar charges alleging that the firm allowed Daniel Calugar, former head of the now-defunct Security Investors Inc., to pour $10 million into a Franklin hedge fund in exchange for the ability to market time an estimated $50 million in mutual fund assets.
Beside naming Calugar and Security Brokerage, the California suit also implicates portfolio manager William Post.
The suit comes one day after top U.S. public pension fund California Public Employee Retirement System said it would look into whether it should continue its relationship with maligned Franklin.