Franklin Agrees to Pay $49M in Market Timing

The Ontario Securities Commission announced late last week that Franklin-Templeton agreed to pay investors $49.1 million for allowing rapid in-and-out trading in some of its funds by three institutional investors from February 1999 to February 2003, according to The Toronto Star.

Templeton is the last of five Canadian mutual fund companies to have reached a settlement with the OSC over an investigation that began in late 2003, shortly after similar investigations began in the U.S. The OSC said that the penalty, the third-largest among the five fund companies, "is to be distributed to those investors who were affected by the conduct in question."

The Canadian regulator said it did not find any instances of market timing since February 2003 or market timing by insiders. Initially setting out to investigate if the company had engaged in late trading, the OSC said it had not found any such instances.

The OSC said that the three institutional investors who allegedly timed the markets made $121 million in profit during the four-year period. In November 2002, Franklin Templeton Investments advised the investors to stop their market timing practices by Jan. 31, 2003.

The OSC, which will issue a report on its findings of the $517 billion Canadian mutual industry in the next few weeks, has looked at 105 mutual fund companies during the course of its investigations.