On July 2, 2020, the SEC announced settled charges against Franklin Advisers, Inc. for breaching its fiduciary duty to its client funds and failing to follow its own policies and procedures, and settled charges against Franklin Advisers and Franklin Templeton Investments Corp. for causing client funds to violate investment limitations.  According to the SEC’s order, both Franklin Advisers and Franklin Templeton Investments purchased certain exchange-traded funds on behalf of client funds, causing the funds to exceed the limits set forth in Section 12(d)(1)(A) of the Investment Company Act of 1940, which prohibits investing more than 10% of an investment company’s assets in other investment companies or acquiring in excess of 3% of the outstanding shares of an investment company. The SEC’s order further finds that Franklin Advisers sold shares of certain ETFs held by its client funds in order for the funds to come into compliance with the limitations, causing certain client funds to suffer more than $2 million in losses. The order finds that Franklin Advisers did not reimburse its client funds for these losses, despite its trade error policy normally providing otherwise. Franklin Advisers then failed to disclose to the client funds’ board of directors the losses incurred, Franklin Advisers’ decision not to reimburse the losses, the associated conflicts of interest, or the deviation from Franklin Advisers’ trade error policy.  Franklin Advisers consented to a cease-and-desist order, a censure and a civil penalty of $250,000, and Franklin Templeton Investments consented to a cease-and-desist order and a civil penalty of $75,000.  []