EXHIBIT 99.1
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FROM: Franklin Resources, Inc.
Corporate Communications: Lisa Gallegos (650) 312-3395
Investor Relations: Greta Gahl (650) 312-4091
franklintempleton.com
FOR IMMEDIATE RELEASE
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FRANKLIN RESOURCES, INC., ANNOUNCES SETTLEMENT AGREEMENT BY SUBSIDIARY
WITH SECURITIES AND EXCHANGE COMMISSION
San Mateo, CA, August 2, 2004 - Franklin Resources, Inc. (Franklin Templeton
Investments) (NYSE: BEN) announced today that an agreement has been reached by
its subsidiary, Franklin Advisers, Inc. (Franklin Advisers), with the Securities
and Exchange Commission (SEC) that resolves the issues resulting from the SEC's
investigation of market timing activity.
Under the terms of an Order issued by the SEC, pursuant to which Franklin
Advisers neither admits nor denies any wrongdoing, the Company has agreed to pay
$50 million to be distributed to Franklin Templeton fund shareholders, of which
$20 million is a civil penalty. The settlement had been accrued by the Company
in its fiscal quarter ended March 31, 2004 and will not result in an additional
charge to income. As previously disclosed, the Company continues to have
discussions towards resolving governmental investigations concerning payments to
securities dealers who sell fund shares commonly referred to as
"revenue-sharing".
In the Order, the SEC recognized that Franklin Templeton has generally sought to
detect, discourage and prevent market timing in its funds and began to increase
its efforts to control market timing in 1999.
Charles B. Johnson, chairman of Franklin Resources, Inc., commented, "In the
late `90s, we began implementing progressively more aggressive steps in our work
to deter abusive market timing. We have always been committed to looking out for
the best interests of our long-term shareholders, while, at the same time,
respecting the fundamental rights of all shareholders to retain both maximum
liquidity and their right to freely allocate their own assets.
As part of our ongoing efforts, we have conducted a comprehensive internal
review with the help of outside counsel. To date, we have not identified any
instances of late trading, nor have we identified any market timing by our
portfolio managers, investment analysts or officers of Franklin Resources, Inc."
Key provisions of the Order include:
* Enhancement and periodic review of compliance policies and procedures,
and establishment of a corporate ombudsman;
* Establishment of a new internal position whose responsibilities shall
include compliance matters related to conflicts of interests; and
* Retention of an Independent Distribution Consultant to develop a plan
to distribute the $50 million to fund shareholders.
"These provisions will be incorporated along with other steps we have already
taken to address these issues," said Martin L. Flanagan, co-chief executive
officer of Franklin Resources, Inc. "Protecting the best interests of our
shareholders and clients has always been our first priority at Franklin
Templeton. We are fully committed to making any necessary policy changes that
will help us better serve our shareholders and clients."
Greg Johnson, co-chief executive officer, added, "Our focus continues to be on
consistently delivering strong investment performance and providing the highest
standard of service to our investors. While this has been a very challenging
time for the mutual fund industry and Franklin Templeton, we truly believe that
our company and our industry will be strengthened in the long run."
Franklin Resources, Inc. [NYSE:BEN], is a global investment organization
operating as Franklin Templeton Investments. Franklin Templeton Investments
provides global and domestic investment management solutions managed by its
Franklin, Templeton, Mutual Series and Fiduciary Trust investment teams. The San
Mateo, CA-based company has more than 50 years of investment experience and over
$350 billion in assets under management as of June 30, 2004. For more
information, please call 1-800/DIAL BEN(R) or visit franklintempleton.com.
FORWARD-LOOKING STATEMENTS
Statements in this press release regarding Franklin Resources, Inc.'s business,
which are not historical facts, are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve a number of risks, uncertainties and other
important factors, some of which are listed below, that could cause the actual
results and outcomes to differ materially from any future results or outcomes
expressed or implied by such forward-looking statements. These and other risks,
uncertainties and other important factors are described in more detail in
Franklin's recent filings with the U.S. Securities and Exchange Commission,
including, without limitation, the "Risk Factors" section of the Management's
Discussion and Analysis of Financial Condition and Results of Operations in
Franklin's Annual Report on Form 10-K for the fiscal year ended September 30,
2003, and Franklin's most recent Form 10-Q.
* Governmental investigations, settlements of such investigations,
ongoing and proposed governmental actions, and regulatory examinations
of the company and its business activities as described in more detail
in the company's press releases and regulatory filings as well as
civil litigation arising out of or related to such matters could
adversely impact our assets under management, increase costs and
negatively impact the profitability of the company and future
financial results.
* Regulatory or legislative actions and reforms, particularly those
specifically focused on the mutual fund industry, could adversely
impact our assets under management, increase costs and negatively
impact the profitability of the company and future financial results.
* Volatility in the equity markets may cause the levels of our assets
under management to fluctuate significantly.
* Weak market conditions may lower our assets under management and
reduce our revenues and income.
* We face strong competition from numerous and sometimes larger
companies.
* Changes in the distribution channels on which we depend could reduce
our revenues or hinder our growth.
* We face risks associated with conducting operations in numerous
foreign countries.
* Certain of the portfolios we manage, including our emerging market
portfolios and related revenues, are vulnerable to market-specific
political or economic risks.
* Our ability to meet cash needs depends upon certain factors, including
our asset value, credit worthiness and the market value of our stock.
* Technology and operating risk and limitations could constrain our
operations.
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