If it is established that (1) the FT fund scheme has put in market risk disclaimers, (2) and investors despite that knowledge have walked in with open eyes into the scheme, and (3) The FT has not misappropriated/cheated the investor willfully or not disclosed info from time to time -> Which is easy for FT to do, then the petition will be disallowed in a short time. FT does not have obligation to pay when the market risk is inherent in the scheme. The grounds for challenging are not sufficient enough to entertain this case in court of law.

Now a days, people go to court to entertain themselves, advertise themselves as well.. Recently, Shakeel Qureshi had filed a case in SC saying term “social distancing” should not be used, but “physical distancing” should be used, as the former term gives impression of discrimination and unequal treatment. Supreme Court got mad at him and slapped a fine of 10K. But, you can imagine what people do …

What happens if someone is invested 50 lacs in one of the shuttered funds and you can sell it at distressed price of only for 5 lacs (>90% loss). People are assuming only 10% haircut but not 50%, 75% or 90%. Many investors do not have an idea of how the listing works and it might confuse lot of investors and ultimately you might be stranded or back to square one if there are no buyers. Already we are seeing the articles that even AA papers from reputed houses have got no takers.

Even after reading about default of Essel papers, it is very sad that some investors believe what FT is doing right and making an efforts of returning the money.

As it happened with Sahara, I do hope that SC takes up this case and justice will be served even at the cost of delay in return of money. No one knows in depth and what exactly happened need to be investigated. As such, I believe first notice from SC would make them straight and immediately their parent company will come will all sorts of options. Who knows SC might ask FT to deposit all the investors money first and fight for the case as it happened in case of Sahara.

Everyone is using the standard rhetoric of MFs are subject to market risks and SC will not take up the case. Repeatedly, I bring this issue that there is no ‘default’ issue here but of liquidity. It is a puzzle to me even today that why only FT funds faced redemption pressure that too during COVID time out of 40 fund houses. Every fund house has similar funds and no one faced any such issues. I know many of them who consumed only 25% of their salary during lockdown and why investors would rush to withdraw only from credit funds of FT but not from Banks and other mutual funds.

It is unfortunate that lamb is ready to believe the butcher and learned investors believe that going to Supreme Court of India is a wrong move and ready to accept that FT is on right course.

SC will definitely take up the case. Then it will ask the petitioner to prove the things that they stated. No room for emotions. If there is no material fault of from FT, and FT acted bona fide, case will be disposed. The question here is the time drag. Smart lawyers can spin a web and create suspicion, get some stay orders etc. no doubt. SC will ask the defendant to deposit sum only if they feel they will ‘run away’ with the money. FT cannot/will not run away, these few schemes does not represent full FT. On liquidity, if everyone queues up to withdraw money, not even the strongest banks stand a chance to return all the deposit money. In such cases, banks borrow from RBI and pay, if they are certain of their investments or bear the consequences. Or they sell what is possible and return proportionate amount to all withdrawals and seek time from authority to return the rest. It is discretion of people who decide on the course of action. There can be delayed payments, but as an individual investor, you do not have much say in all this. Earliest thing they will get to see, is the disclaimer fine-print.

When SC takes up the case, it would refer to the case generally to technically committees to investigate the facts. Let them scrutinize FT of what due diligence it has adopted while investing in various papers and have they invested as per the mandate. Again the question, out of so many fund houses and their MFs, why only 6 FT funds face redemption pressure. I am presuming it is tip off by the fund house itself to big corporate guys and got kickbacks. Nowhere it is mentioned that MFs are subject to liquidity risks and they can’t hide under fine print.

If you look at the PMC Bank case, its CEO coming on to press after 2 days of RBI moratorium and declared that there is no issue with PMC Bank. The problem is no management would accept the downfall as their fault and it needs SC like authority to direct the things instead of believing FT Mgmt stories. Personally, I feel these FT guys should have been removed immediately which FT didn’t do.

If FT would have cared about its image, a simple bank guarantee from a parent company could have handled the redemption pressure. I have no faith that investors money would ever be recovered either partly or full even from FIUBF leave alone other funds.

If someone stabbed family member, admitted in ICU and the family has to spend a fortune for treatment, one shouldn’t tell the family advising not to take the offender to court for fear of losing further money towards litigation.

There are 3 kinds of people in connection with FT case.
(1) Those who have lent money to FT and FT is in temporary liquidity problems. But it is reasonable that FT is doing enough and investors will eventually get back their money, bit delayed. FT tries hard to save their investors. So the investors wait and watch.
(2) Those who sense/anticipate grave danger that money will never be returned, gets worked up and so immediately group up and drag FT to court. They may be doing themselves harm by involving the court and creating undue delay.
(3) Those who like to create issue out of nothing. They are fighting with the pig in the mud fighting cases and after exhaustion find out that the pig was actually enjoying it. There are many in this category.

How has nobody here mentioned how ill-thought listing of a distressed mutual fund is? Unless there is ZERO liquidity, the market will fund a price for the fund based on the underlying securities. Retail investors, unable to value opaque debt instruments, will be price takers and big institutions with inside information (even FT!) may be able to buy units of the fund at bargain prices! This same issue happens in stocks where insiders have more information than outsiders. Someone in the market is going to make a killing.