From the top…

February 18, 2004

In the huge ongoing mutual fund scandal, it seems as if the SEC is now targeting Franklin Resources (BEN) co-chief executive Greg Johnson, son of company founder Charles B. Johnson. Buried on p. 16 of the 46 page 10-Q filed yesterday is a disclosure that the SEC “intends to recommend…a civil injunctive action” — legalese for a lawsuit — against both Johnson and Franklin Advisers over market timing issues. Last week, in a separate SEC filing, Franklin disclosed that the SEC planned to take action against two senior officers and a Franklin subsidiary, but declined to name any names. Back in November, Johnson told reporters from the San Francisco Chronicle that top executives at mutual fund companies should be made to pay for the huge mutual fund scandal. Founders of firms were being forced to resign, he said. “That’s punishment, and that sends a powerful message that this will not be tolerated,” the executive told the paper.

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