Franklin Resources placed three employees on administrative leave while the firm conducts an internal review of possible frequent trading of shares in the company's funds.
In a release on its website, Franklin Resources said it found "various instances of frequent trading" that it is investigating; "one officer" of a subsidiary was placed on leave pending the outcome of that investigation. Franklin also identified "some instances" of frequent trading of Franklin fund shares by its employees in their 401(k) plan accounts, with "one trader and one officer of our funds" being placed on leave as a result; that fund officer has resigned, according to the release.
The firm also said it found no evidence so far of inappropriate mutual fund trading by "any portfolio manager, investment analyst or officer of Franklin Resources Inc." Franklin will compensate for any losses its funds might have sustained as a result of improper conduct that the firm should have prevented, the release said.
The release also noted that Franklin received a subpoena from the U.S. Attorney for the Northern District of California as well as requests for information from regulatory authorities in some foreign countries. Stacey Johnston, Franklin spokeswoman, could not provide further details.