Franklin Resources Inc., the parent of Franklin Templeton Investments, Monday said that the Securities and Exchange Commission intends to recommend charging the company and two unnamed executives over mutual fund trading practices.
Last week, Massachusetts regulators charged the mutual-fund company, the country's fourth largest, with civil fraud, alleging it let a Las Vegas businessman make $45 million worth of improper mutual fund trades in exchange for his $10 million investment in a Franklin hedge fund.
In its filing with the SEC, Franklin Resources said the businessman's sales activities didn't violate the fund's prospectus, and it believes no investors in the mutual fund were harmed.
The San Mateo, Calif., fund company is in settlement talks with the SEC.
Massachusetts regulators claimed that the businessman, Daniel G. Calugar, president of Security Brokerage Inc., was permitted to rapidly trade $45 million in Franklin Small Cap Growth Fund, now known as Franklin Small-Mid Cap Growth Fund.
Franklin Resources is also being investigated by Florida, California, New York state prosecutors.