FORT LAUDERDALE, Fla. -- The Templeton Vietnam Opportunities Fund has violated securities law and breached its fiduciary responsibility, alleges a class-action suit filed in U.S. District Court for the Southern District of Florida on behalf of hundreds of shareholders.
The closed-end fund had $105 million under management as of Sept. 30, the most recent date for which the company provided a net asset figure.
The suit names fund manager Mark Mobius and several Templeton entities as defendants.
The suit alleges officials of Templeton Worldwide Inc. promised investors that if the fund was unable to invest at least 65% of its assets in Vietnamese companies by Oct. 1, 1997, a shareholder vote would be called to liquidate the fund or change its name and investment mandate. The meeting was not held in October.
The fund never invested more than 15% in Vietnamese stocks, said James Roumell, who invested in the fund on behalf of clients.
A spokeswoman for Franklin Templeton said the company has reviewed the complaint and found it without merit and intends to defend itself vigorously.
By mid-1997, Mr. Roumell said, about half of the fund's assets were invested in U.S. short-term securities. Rather than position the fund for potential liquidation or a change in investment direction, Mr. Roumell alleges in the suit that Mr. Mobius instead invested a large portion of the fund's assets in Thailand about two months before the promised October meeting. That investment was severely affected by subsequent turmoil in Asia.
The suit contends that by failing to allow shareholders to liquidate the fund when promised, Templeton caused shareholders to lose more than $30 million.
A shareholder proxy is out now that would amend the fund's investment mandate to allow the manager to invest more broadly in Southeast Asian countries while continuing to focus on Vietnam. The proxy is due at the end of the month and a shareholder meeting is scheduled for March 31.
