Franklin Templeton on Friday issued an “unconditional apology” to market regulator Securities and Exchange Board of India (Sebi) over its global chief comments that regulatory tightening contributed to winding up of schemes. The fund house said the remarks made by Jenny Johnson, president and CEO, Franklin Templeton during their quarterly earnings call were quoted “out of context” by media outlets.

“We deeply regret any unintended slight this may have caused to the esteemed offices of Sebi whom we have always held in the highest regard and unconditionally apologise for the same,” said Sanjay Sapre, President, Franklin Templeton AMC, the domestic arm of the global assert manager.

During an analysts call on Wednesday, Johnson had said “Unfortunately, Sebi came out with new guidelines saying that any investments in unlisted instruments in funds can’t have more than 10 per cent in a fund, and you can’t trade them. So that orphaned about a third of our fund there.”

The fund house said it regrets the misunderstanding the statement has caused.

“In response to a question regarding the winding up of six schemes offered in India, Johnson provided general background concerning Franklin Templeton’s experience in the Indian market as it existed before covid-19. The reference to the regulations around unlisted securities was intended to be a part of these background statements to provide context to an audience unfamiliar with Indian markets,” the fund house said in a statement.

Franklin further said that the primary reason which forced the decision to wind up the six schemes was “ severe market dislocation caused by the Covid-19 pandemic and related lockdown which led to severe market illiquidity particularly for papers rated below AAA, combined with heightened redemptions during this period.”

Stung by the comments made by the global chief, market regulator on Thursday issued a press release defending the new rules it introduced in October last year. It also advised Franklin Templeton to return investors money stuck in the six schemes.

In the context of Johnson’s comments, Sebi said: “It may be noted that in light of credit events since September, 2018 which led to challenges in the corporate bond market, a need was felt to review the regulatory framework for MFs and take necessary steps to safeguard the interest of investors and maintain the orderliness and robustness of their investments.”

The regulator said the new investment rules were taken after due consultation and deliberation with an 18-member expert panel, which included Sapre.

The fund house said the discussion to wind up the schemes was a difficult one but had to be taken.

“Franklin Templeton would like to highlight that every possible option to avoid this difficult decision was considered, but it was concluded that this was the only viable option to protect value for investors in these funds. Working closely with the trustees, the firm is committed to ensuring an orderly and equitable exit for all investors at the earliest possible time,” it said.

The asset manager said it remained committed to India.

“Franklin Templeton has a long history of over 25 years in India, where a third of our global workforce is based, and the firm remains fully committed to our clients and our business in India,” Sapre’s statement added.