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Mumbai, The <keyword id="6357808" type="General" weightage="20" keywordseo="enforcement-directorate" source="Orion">Enforcement Directorate</keyword> is conducting searches at some places linked to <keyword id="16811721" type="General" weightage="20" keywordseo="asset-manager-franklin-templeton" source="Orion">asset manager Franklin Templeton</keyword> and its former and current executives in Mumbai and Chennai as part of a money laundering investigation, officials said. The federal agency is looking to gather more evidence as part of its investigation against the company and its promoters under the Prevention of Money Laundering Act (PMLA), they said. In November 2020, capital markets regulator Sebi issued a show-cause notice to the company following its April 2020 decision to wind up six debt schemes having Rs 25,000 crore of assets under management (AUM) from 3 lakh investors, citing liquidity challenges because of the pandemic. Eventually, the company was asked to pay Rs 5 crore as penalty, return over Rs 450 crore collected as 22-month investment management and advisory fees, and was banned from launching new debt schemes for alleged irregularities in running the six debt schemes. The Chennai police economic offences wing (EOW) subsequently registered an FIR to probe these alleged irregularities. The ED case of money laundering stems from this complaint. In 2021, Sebi restricted the heads of the asset manager - Vivek Kudva and Roopa Kudva - from accessing the securities market and from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of one year.

Enforcement Directorate conducts searches against Franklin Templeton in Mumbai, Chennai

<div class="KonaFilter image-container display-table"><div><div class="image on-image">Reuters"Given the channel we're focused on, we think it'll be a gradual process - institutions will take their time to evaluate," said Ed Lopez, VanEck's head of ETF product.</div></div></div><ul class="summary-list"><li>Two asset managers are making crypto-related plays: one is launching a bitcoin fund open only to big investors, and the other is offering a money-market fund with a blockchain twist.</li><li>The SEC hasn't budged on approving bitcoin-backed exchange-traded funds, which would be open to investors large and small. The ETF field is hyper-competitive, with firms constantly looking for a new niche to lure assets. </li><li>Franklin Templeton is hoping blockchain can help with fund transparency and offer other benefits. And VanEck has teamed up with SolidX to create what could be a predecessor to a bitcoin ETF. </li><li><a href="https://www.businessinsider.com/prime">Click here for more BI Prime stories</a>.</li></ul>Asset managers haven't been able to persuade the SEC to greenlight bitcoin exchange-traded funds. Now they're turning to putting a crypto spin on other kinds of products. The field is crowded with ETFs tracking benchmarks like stock and bond indexes, and firms are constantly looking for a new niche to lure assets. Intense competition has prompted a race to, <a href="https://www.businessinsider.com/salt-financial-etf-pays-investors-to-hold-etf-2019-3">and even below</a>, zero for fees on some more basic funds. $50 billion asset manager VanEck for years has been pursuing approval for an ETF that holds bitcoin. Another firm's attempt to launch ETFs with bitcoin futures instead was a non-starter - in February, <a href="https://www.sec.gov/Archives/edgar/data/1573496/000114420419006643/tv513274_aw.htm">Reality Shares</a> withdrew a filing for an actively-managed <a href="https://www.sec.gov/Archives/edgar/data/1573496/000114420419005966/tv512882_485apos.htm">currency and bitcoin futures portfolio.</a>VanEck this week <a href="https://www.vaneck.com/vaneck-solidx-bitcoin-trust-issues-144a-shares-for-qualified-institutional-buyers/">said</a> it's teamed with fintech partner SolidX on a bitcoin fund with the same behind-the-scenes plumbing as an ETF. But the new fund is not registered like an ETF, and it's off-limits to individual investors. And Franklin Templeton is putting a blockchain twist on the staid money fund realm. It already has a suite of money market funds, but said in a statement the new product is aimed at a "different and unique customer base."The Franklin Blockchain Enabled US Government Money Fund keeps a traditional record of share ownership as well as a record on the blockchain technology that underpins bitcoin. It does not hold any crypto.Read more: <a href="https://www.businessinsider.com/salt-financial-etf-pays-investors-to-hold-etf-2019-3">A new ETF is actually paying investors to hold it and it's the latest sign in how insane the fee war has gotten</a><h2>A gradual process</h2>The Franklin fund is "an interesting pilot," said Ben Johnson, Morningstar's director of global ETF research. Firms' margins are getting squeezed as <a href="https://www.businessinsider.com/morningstar-october-fund-flows-2018-11">investors flee active management</a> in favor of low-cost passive funds. "Asset manager fees are under greater pressure than they've ever been," Johnson said, leaving "no stone unturned" when it comes to their own expenses.In 2017, Vanguard said it would <a href="https://pressroom.vanguard.com/news/Press-Release-Vanguard-Using-Blockchain-Technology-To-Improve-Index-Data-Distribution-121217.html">work with two other groups</a> to share index data using blockchain with the aim of improving benchmark tracking.While the Franklin Templeton fund may in the future be maintained solely on blockchain, the $710 billion asset manager said in a <a href="https://www.sec.gov/Archives/edgar/data/1786958/000113743919000429/fttn1a092019.htm">filing</a> there's "no guarantee" that will happen. Blockchain is "a ripe development platform," a firm spokesperson said.Morningstar's Johnson said the VanEck bitcoin trust helps investors avoid the "headaches" of bitcoin custody, but noted "it's awfully hard to predict" demand.Grayscale Investments offers crypto for big investors via periodic private placements. Its bitcoin trust <a href="https://grayscale.co/bitcoin-trust/">charges a 2% fee</a>, the asset manager's website says, and collected $2.4 billion since its 2013 launch. "Given the channel we're focused on, we think it'll be a gradual process - institutions will take their time to evaluate," said Ed Lopez, VanEck's head of ETF product.For perspective, SPDR Gold Shares, State Street's physical gold ETF with an expense ratio of 0.4%, has picked up nearly $44 billion since its 2004 listing. Read more: <a href="https://www.businessinsider.com/a-new-etf-structure-could-help-money-losing-active-managers-2019-6">Asset managers losing billions are hoping a new kind of fund can turn their business around. </a><h2>Volatile ride</h2>Providers pushing to lock down ETF approval could risk crypto falling out of favor in the meantime. SEC Commissioner Hester Peirce <a href="https://www.sec.gov/news/speech/speech-peirce-052119">said</a> in May it may be a long time before a bitcoin ETF gets green-lighted.Todd Rosenbluth, head of ETF and mutual fund research at CFRA, highlighted the inherent uncertainty around new <a href="https://markets.businessinsider.com/currencies/btc-usd">crypto</a> products. "While the security's price has partially recovered from lows in early 2019, it has been a volatile ride and demand remains uncertain," he said. Only investors with over $100 million in assets can buy VanEck SolidX Bitcoin Trust shares. If the SEC ever does allow a mainstream ETF, institutions' shares could roll over into that product, Lopez said. Fees are 2% to the fund sponsor, plus a 0.9% insurance fee to cover bitcoin theft, VanEck's website says. Institutional investors lack the framework, including central clearing and brokerage accounts set up for crypto, to hold bitcoin, Lopez said. "What we're hoping this does for them is it wraps all that stuff together and makes a tradeable product," Lopez said. BNY Mellon is the VanEck fund accountant and administrator. Read more: <a href="https://www.businessinsider.com/cantors-browne-says-bitcoin-etfs-arent-likely-2018-11">The 'godfather' of a $4.7 trillion market says a bitcoin ETF will be approved 'no time soon'</a> <div class="margin-top"> <h3>NOW WATCH: <a href="https://www.businessinsider.com/webinar-headset-ceo-walks-through-successful-series-a-pitch-deck-2019-9">WATCH: The founder of buzzy cannabis-tech startup Headset walked us through the pitch deck that helped him raise $12 million and ink deals with Nielsen and Deloitte</a></h3> <div> </div> </div>

The SEC won't play ball on bitcoin ETFs. Here's how Franklin Templeton and others are launching funds with crypto and blockchain twists.

<ul><li>India’s financial investigation agency has been investigating Amazon and <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword> over the years. </li><li>The Enforcement Directorate issued a show-cause notice to both the companies and its founders last month. </li><li>Flipkart raised a $3.6 billion round at a valuation of $37.6 billion, a two-fold increase from 2018.</li></ul>India’s Enforcement Directorate (ED) has reportedly warned Walmart-owned Flipkart and its founders — <keyword id="225032" type="PERSON" weightage="20" keywordseo="Sachin-Bansal">Sachin Bansal</keyword> and <keyword id="6364080" type="PERSON" weightage="20" keywordseo="binny-bansal">Binny Bansal</keyword> — with a $1.35 billion penalty for alleged violation of the country’s foreign investment laws. According to a Reuters report citing sources it did not name, the financial investigation agency has alleged that after Flipkart got foreign investment, a related party, <keyword id="1556044" type="PERSON" weightage="20" keywordseo="WS-retail">WS Retail</keyword>, started selling goods to consumers via the e-commerce platform. This is prohibited under Indian law. ED has issued show-cause notice to both the companies and its founders last month to explain why they shouldn’t face a penalty of $1.35 billion for allegedly violating India’s foreign direct investment (FDI) policy. Tiger Global, which has been an investor in Flipkart for a decade has also been issued such a notice. Tiger Global declined to comment on the issue. A Flipkart spokesperson told Reuters, the company is "in compliance with Indian laws and regulations…We will cooperate with the authorities as they look at this issue pertaining to the period 2009-2015 as per their notice." One of the sources at Flipkart told Reuters that they have around 90 days to respond to the notice and WS Retail had ceased its operations at the end of 2015. Flipkart was acquired by <keyword id="80487" type="COMPANY" weightage="20" keywordseo="walmart">Walmart</keyword> in 2018, after which Sachin Bansal sold off all his shareholdings but Binny Bansal continues to hold some. The company’s valuation has doubled since then, from $16 billion in 2018 to $37.6 billion now. Last month, the company raised a $3.6 billion round led by Singapore-based GIC, Canada Pension Plan Investment Board (CPP investments), Softbank Vision Fund 2 and Walmart. DisruptAD, Qatar Investment Authority, Khazanah Nasional Berhad, Tencent, Willoughby Capital, Antara Capital, Franklin Templeton and Tiger Global also participated in the round. SEE ALSO <a href="https://www.businessinsider.in/business/startups/news/whitehat-jrs-ceo-karan-bajaj-quits-exactly-a-year-after-byjus-acquisition/articleshow/85029450.cms">WhiteHat Jr’s CEO Karan Bajaj quits exactly a year after Byju’s acquired the company</a> <a href="https://www.businessinsider.in/business/startups/news/moengage-wants-an-office-in-new-york-and-hire-to-150-techies-in-india/articleshow/85057941.cms">INTERVIEW: MoEngage, which helps companies like Domino's engage with customers, wants an office in New York and 150 techies in India</a> <a href="https://www.businessinsider.in/business/startups/news/tiger-global-pumps-enough-money-to-make-bharatpe-a-unicorn-about-a-month-after-it-got-a-banking-licence-with-centrum-as-its-partner/articleshow/85027918.cms">Tiger Global pumps enough money to make BharatPe a unicorn about a month after it got a banking licence with Centrum as its partner</a>

Flipkart and Tiger Global have a billion dollar notice to respond to in the next 90 days

<ul class="summary-list"><li><keyword id="9294554" type="UNKNOWN" weightage="60" keywordseo="amy-cooper">Amy Cooper</keyword>, who called 911 on <keyword id="719218" type="PERSON" weightage="60" keywordseo="Christian-Cooper">Christian Cooper</keyword> in <keyword id="6357786" type="LOCATION" weightage="60" keywordseo="central-park">Central Park</keyword>, has sued Franklin Templeton.</li><li>She said the company fired her without an investigation and falsely portrayed her as racist.</li><li>She is seeking unspecified damages for race and gender discrimination, defamation, and negligence.</li></ul>NEW YORK (<keyword id="76338" type="CITY" weightage="60" keywordseo="Reuters">Reuters</keyword>) - The white woman who falsely told the police that a Black bird-watcher had threatened her in New York City's Central Park has sued her former employer Franklin Templeton, saying it fired her without investigating the incident and falsely portrayed her as racist.In a complaint filed on Tuesday night in Manhattan federal court, Amy Cooper said Franklin Templeton's actions "caused her such severe emotional distress that she was suicidal."Cooper is seeking unspecified damages for race and gender discrimination, defamation, intentional infliction of emotional distress, and negligence.Franklin Templeton, part of Franklin Resources Inc., did not immediately respond on Wednesday to requests for comment.Cooper's May 25, 2020, dispute with the bird-watcher Christian Cooper, who is not related to her, drew wide attention after a video surfaced of her calling the police and saying, "There's an African American man threatening my life."She had made the call after Christian asked her to put her dog on a leash.Franklin Templeton fired Cooper the next day. The video has been seen on Twitter more than 45 million times.In July, Cooper was charged by Manhattan prosecutors with filing a false police report, but the misdemeanor charge was dismissed after she completed a therapy program that included instruction on not using racial bias.Christian, who recorded the confrontation on his phone, has spoken out against the charges against Cooper, calling it a "mistake to focus on this one individual" in an op-ed for <a href="https://www.washingtonpost.com/opinions/christian-cooper-why-i-am-declining-to-be-involved-in-amy-coopers-prosecution/2020/07/14/1ba3a920-c5d4-11ea-b037-f9711f89ee46_story.html">The Washington Post</a>."The important thing the incident highlights is the long-standing, deep-seated racial bias against us black and brown folk that permeates the United States," Christian wrote. "Focusing on charging Amy Cooper lets white people off the hook from all that."

Amy Cooper, who falsely called 911 on a Black bird-watcher in Central Park, is suing her former employer over her firing

Hey there! <a href="https://twitter.com/dandefrancesco">Dan DeFrancesco</a> in NYC. I don't care what TikTok says, <a href="https://www.insider.com/raw-oyster-safety-according-to-experts-vibrio-2023-5">I'm not going to to stop eating raw oysters.</a> (If I die from a raw oyster, please delete this newsletter from the internet so they can't mock me for it.)Today, we've got stories on <a href="https://www.businessinsider.com/blackrock-artificial-intelligence-larry-fink-2023-5">BlackRock's AI ambitions</a>, <a href="https://www.businessinsider.com/rockefeller-dealmaking-franklin-templeton-desmarais-5-2023">an under-the-radar firm that's nabbing deals amid the M&amp;A drought</a>, and <a href="https://www.businessinsider.com/most-expensive-cities-for-childcare-daycare-us-affordable-care-cost-2023-5">why childcare costs so much in certain cities.</a>The <a href="https://www.businessinsider.com/house-pass-mccarthy-biden-debt-ceiling-agreement-fiscal-responsibility-2023-5">US is one step closer to avoiding a default in a matter of days</a>. The House passed President Joe Biden's and Speaker of the House Kevin McCarthy's bill.But first, can I count on your vote?If this was forwarded to you, <a href="https://www.businessinsider.com/subscription/newsletter/10-things-on-wall-street">sign up here</a>. Download Insider's app <a href="https://www.insider.com/app">here</a>.<a href="https://www.businessinsider.com/jpmorgan-ceo-jamie-dimon-considers-politics-bill-ackman-president-election-2023-6"></a>1. <a href="https://www.youtube.com/watch?v=24Be_O9cHVQ">If I was president ...</a>Jamie Dimon for president?There has long been speculation that <a href="https://www.businessinsider.com/jamie-dimon-jp-morgan-ceo-first-republic-bank-rescue-2023-3">America's most-famous banker</a> has plans to run for some sort of public office. The JPMorgan CEO hasn't shied away from the idea either.Wednesday marked another opportunity for Dimon to sprinkle breadcrumbs."I love my country, and maybe one day I'll serve my country in one capacity or another," <a href="https://www.businessinsider.com/jpmorgan-ceo-jamie-dimon-considers-politics-bill-ackman-president-election-2023-6">Dimon told Bloomberg</a>.Dimon's already got one vote, it seems. Billionaire hedge-fund manager Bill Ackman offered a soliloquy of sorts on Twitter about how Dimon <a href="https://twitter.com/BillAckman/status/1663959113703751720" target="_blank" rel="noopener">would be an ideal presidential candidate.</a>The path from Wall Street to Washington is well worn, with plenty of high-profile executives taking up positions in the government. That got me thinking ... who else might make a good politician? And what role would suit them?Kenneth Chenault — Governor of New YorkNo disrespect to Gov. Kathy Hochul, but she's had a tough go of it in recent months. Her plan to address New York's <a href="https://www.businessinsider.com/rich-new-york-suburbs-losing-minds-hochul-plan-increase-housing-2023-4">housing shortage went over like a lead balloon</a>. The former American Express CEO and current chairman and MD at General Catalyst might be exactly what the state needs.Chenault has a history of taking up civic causes, including <a href="https://www.businessinsider.com/restrictive-voting-laws-companies-ceos-ad-organized-by-black-executives-2021-4">encouraging CEOs to oppose restrictive voting laws.</a> He's also not shy about taking a position on things. He recently <a href="https://www.washingtonpost.com/opinions/2023/05/26/diversity-education-business/" target="_blank" rel="noopener">co-penned an op-ed in The Washington Post</a> criticizing Florida's new law <a href="https://www.washingtonpost.com/education/2023/05/15/desantis-defunds-dei-programs-florida-colleges/" target="_blank" rel="noopener">defunding DEI programs at public colleges.</a>Larry Fink — White House National Climate AdvisorWe've already covered how <a href="https://www.businessinsider.com/blackrock-larry-fink-succession-plans-ceo-2023-5">BlackRock is considering life without Larry.</a> A move into the public sector seems like a natural fit.Fink would make for a good Treasury Secretary candidate, but why not let him take charge of something he's clearly passionate about: climate change. Adena Friedman — Commissioner of Fintech I'm bending the rules by creating a made-up position, but stick with me. Fintechs are leveling up from adolescence to adulthood — or at least trying to — and becoming a bigger part of the world of finance. Yet we don't have a dedicated regulatory body to oversee them. The combination of agencies claiming oversight of fintechs is a game of alphabet soup: SEC, CFTC, OCC, CFPB, etc. That's where Friedman comes in. The president and CEO of Nasdaq is well-versed in technology. When most Wall Street executives were still afraid of the public cloud, <a href="https://www.businessinsider.com/nasdaqs-ceo-said-exchanges-should-move-to-the-cloud-2019-3">she was ready to embrace it with open arms.</a> Someone with that type of foresight is an ideal candidate to oversee the space at a critical juncture.Jon Gray — Treasury SecretaryBlackstone's president and chief operating officer has already had a brush with public office. <a href="https://www.politico.com/blogs/donald-trump-administration/2016/11/jonathan-gray-wont-serve-as-treasury-secretary-231799">Gray met with then-President-elect Donald Trump</a> about serving as his Treasury Secretary back in 2016. The fact that Gray, a Democrat, was even considered for a cabinet position for a Republican president speaks to the strength of his résumé. Gray's left-leaning beliefs juxtaposed with his private-equity background would make him an interesting jousting partner for Wall Street's biggest nemesis in Washington: Sen. Elizabeth Warren. Ken Griffin — Governor of FloridaThe billionaire hedge-fund manager has used his considerable wealth to influence politics <a href="https://www.businessinsider.com/ken-griffin-citadel-florida-desantis-politics-hedge-fund-2022-12">as a mega donor for the GOP in recent years.</a> Griffin also hasn't been bashful about his love for the state of Florida, relocating his company from Chicago to Miami.And while Griffin hasn't agreed with <a href="https://www.thecrimson.com/article/2023/5/30/ken-griffin-florida-law/">all of Florida Gov. Ron DeSantis' politics</a>, it seems as if he'll eventually back him. If DeSantis were to win the US presidency in 2024, that would leave an opening for a new governor in the state.Brian Moynihan — Vice PresidentThis is a tricky position. You can't be too flashy to take the shine away from the POTUS, but you need to be capable enough to step into their shoes. Moynihan's mantra — <a href="https://www.bloomberg.com/news/articles/2022-12-22/bank-of-america-s-focus-on-responsible-growth-shapes-its-strategy?sref=5xrDvJna">"responsible growth"</a> — is exactly the type of mindset you want. Bonus points for Moynihan being from a swing state (Ohio), which is always a plus for a running mate. Dan Schulman — Secretary of CommerceSchulman's days at PayPal are numbered, as the company's CEO and president has <a href="https://www.businessinsider.com/paypal-potential-ceo-candidates-to-succeed-dan-schulman-2023-2">said he will retire by the end of the year.</a> The idea of him holding public office doesn't seem far-fetched.As someone who has held executive positions across a number of businesses — American Express, AT&amp;T, Virgin Mobile, PayPal — he's got boots-on-the-ground experience of what does, and doesn't, work at companies. That makes him a nice pick to lead commerce. In other news:<a href="https://www.insider.com/taylor-swift-fans-say-theyll-wear-adult-diapers-to-concert-2023-5"></a><div type="image" title="taylor swift eras tour" height="3993" width="5342" msid="100681679" hostid="261"></div>2. BlackRock &lt;3 AI. CEO Larry Fink said the massive asset manager was spending "a huge amount of time" on the tech to boost productivity. <a href="https://www.businessinsider.com/blackrock-artificial-intelligence-larry-fink-2023-5">Here's how Fink and co. are thinking about the cutting-edge tech.</a>3. Even amid a dealmaking drought, the rich get richer. Rockefeller Capital Management advised Canadian insurer Great-West Lifeco on the sale of its asset-management subsidiary Putnam Investments to Franklin Templeton. It's a deal that could be worth up to nearly $1.4 billion. <a href="https://www.businessinsider.com/rockefeller-dealmaking-franklin-templeton-desmarais-5-2023">More on how Rockefeller nabbed the deal here.</a>4. The curious case of Blackstone's position on office-space investments. CEO Stephen Schwarzman has warned of the challenges that US offices are facing. Meanwhile, a real-estate-finance company managed by Blackstone still holds a sizeable chunk of loans tied to office properties. <a href="https://www.businessinsider.com/blackstone-cooled-on-office-related-company-leaves-it-exposed-2023-5">The office-space conundrum at Blackstone.</a>5. Nobody seems to want to stay at Credit Suisse. The Swiss bank, which is in the process of being acquired by rival UBS, is losing employees by the hundreds, Reuters reported. <a href="https://www.reuters.com/business/finance/credit-suisse-bankers-leaving-by-hundreds-every-week-sources-2023-05-31/">The full story.</a>6. Warren Buffett is basically a quant, you guys. At least, that's according to AQR cofounder Cliff Asness, who said the famed investor has some commonalities with those who take a quantitative approach. <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-quant-trader-berkshire-hathaway-stocks-analysis-cliff-asness-2023-5?_gl=1*1mwrf5h*_ga*NDEwMTkzOTE2LjE2NjYxMjcyNDQ.*_ga_E21CV80ZCZ*MTY4NTU2MDAzMS4xMC4xLjE2ODU1NjQ2NDcuMjUuMC4w">Here's more on Asness' thinking.</a>7. Some good news for a neobank. It's tough sledding for fintechs nowadays, but UK-based Monzo more than doubled its revenue last year. The digital bank also cut its losses to only $143 million. (These days, that's a win.) <a href="https://www.businessinsider.com/monzo-uk-fintech-bank-increases-revenues-and-narrows-losses-2023-5">Here's what's on tap for 2023, per the CEO.</a>8. Kids are really expensive. (Yes, I can confirm.) Childcare can be wildly expensive, depending on where you live. <a href="https://www.businessinsider.com/most-expensive-cities-for-childcare-daycare-us-affordable-care-cost-2023-5">Here's a breakdown of the cheapest, and most expensive, places for getting childcare.</a>9. If you're looking to buy a home, start in these cities. These 10 cities have home prices that are affordable when considering income and the rise of property values. <a href="https://www.businessinsider.com/10-best-us-cities-to-become-homeowner-in-2023-2023-5">Check them out.</a>10. Taylor Swift fans are wearing diapers to her concerts so they don't miss any of her songs. More on how Swifties <a href="https://www.insider.com/taylor-swift-fans-say-theyll-wear-adult-diapers-to-concert-2023-5">know no limits to their fandom.</a>Curated by Dan DeFrancesco in New York. Feedback or tips? Email <a href="mailto:ddefrancesco@insider.com">ddefrancesco@insider.com</a>, tweet <a href="https://twitter.com/dandefrancesco">@dandefrancesco</a>, or <a href="https://affiliate.insider.com?h=b83e78f6bb45aba7034c3baf1ec66d1b6c1d3afa26264bdb8604d5b9f2351262&amp;postID=6477543d8c8a4f267d10dfe0&amp;site=bi&amp;u=https%3A%2F%2Fwww.linkedin.com%2Fin%2Fdan-defrancesco-29b12449%2F">connect on LinkedIn</a>. Edited by Jeffrey Cane (tweet <a href="https://twitter.com/jeffrey_cane">@jeffrey_cane</a>) in New York and Nathan Rennolds (tweet <a href="https://twitter.com/ncrennolds?lang=en">@ncrennolds</a>) in London.

From Wall Street to Washington: Which finance execs would make the best public servants?

<div class="KonaFilter image-container display-table"><div><div class="image on-image">Franklin Templeton InvestmentsSonal Desai, fixed income chief investment officer for Franklin Templeton Investments.</div></div></div><ul class="summary-list"><li>Indexing and other passive investments have become enormously popular in recent years, but Sonal Desai and Ed Perks - a pair of chief investment officers at Franklin Templeton - say active management might be the best approach in today's market.</li><li>The two manage a combined $248 billion, and they say simple strategies like indexing look more and more risky as valuations continue to increase. </li><li>Desai and Perks said they have serious concerns about the private credit market, pointing to its lack of transparency and the potential for trouble in that market to touch off selling elsewhere.</li><li><a href="https://www.businessinsider.com/prime?module=article&amp;area=summary">Click here for more BI Prime stories</a>.</li></ul>Every year, more and more investors use passive investing strategies like <a href="https://www.businessinsider.com/how-to-invest-in-index-funds-explained">index funds</a> to ride along with the market instead of asking someone to help them race ahead of it.That's worked out very well in the past decade, thanks in part to the combination of a long, broad rally in stocks and <a href="https://www.businessinsider.com/a-new-etf-structure-could-help-money-losing-active-managers-2019-6">the minimal price tags tied to that style of investing</a>. But with stocks at all-time highs and a series of complex challenges ahead, it could be time for a more nuanced approach.That's the argument made by Sonal Desai, the chief investment officer of Franklin Templeton's $152 billion fixed-income group, and Ed Perks, the CIO for $96 billion Franklin Templeton Multi-Asset Solutions."Being an active manager is not in favor right now with end users and clients, but it will probably come back with a bit of a bang," Desai told Business Insider in an interview.Perks added: "In certain asset classes at certain times, active management will be the primary vehicle with which alpha can be delivered."He said that when choosing stocks, he's emphasizing quality and earnings stability as well as healthy balance sheets.Read more: <a href="https://www.businessinsider.com/currency-war-crisis-is-looming-us-says-albert-edwards-socgen-2019-7">'This will turn nasty': A crisis is brewing as a global currency war approaches, and one expert says he's found the most vulnerable assets traders should avoid</a>But the concerns of the two CIOs spread well beyond equities. Perks said he's being especially selective about exposure to the <a href="https://www.businessinsider.com/stock-market-outlook-impact-of-growing-private-equity-debt-markets-2019-7">private credit market</a>, which he thinks is more levered than it looks. He also notes that the space has expanded rapidly as wealthy, yield-hungry investors look for bigger returns than they can't get elsewhere.But he's not avoiding those investments entirely, and neither is Desai. The reason is simple: They can't, because there are so few "screaming buys" left in the market.It's the same "get in or get left behind" situation facing investors across the entire market. Emboldened by mostly-strong fundamentals, they're continuously enticed to take risk because of <a href="https://markets.businessinsider.com/news/stocks/federal-reserve-interest-rate-decision-jerome-powell-again-signals-cuts-2019-6-1028307084">low and falling interest rates</a> and weak returns from safe assets like bonds.It's a conundrum - one made even more sensitive by Desai's view that turmoil in the private credit market could create contagion and waves of selling in other, more liquid assets. That could bring a lot of pain to heavily indexed stocks, whose share prices are closely tethered to the market's overall whim.Desai says managers can help investors balance out these lingering dangers in a way that passive choices like index funds can't."If you're invested in an entire index against this background there is no doubt that you are picking up too much of everything," she said. "When you're buying an index you're buying it all."She added that with stretched valuations and uncertainty around global growth and the health of the market, she's keeping the duration of her investments short."If you do get a crash you want to be paid back," Desai said. "If you remain relatively short in your duration aspects, it means you will get closer to the point of being paid back in full." <div class="margin-top"> <h3>NOW WATCH: <a href="https://www.businessinsider.com/300-million-world-cup-stadium-is-nearly-abandoned-2018-6">Brazil spent an estimated $300 million on a World Cup stadium that now sits nearly abandoned</a></h3> <div> </div> </div>

A pair of investment chiefs overseeing $248 billion explain why it's time to steer clear of a wildly popular investing method - and offer a compelling alternative

<div class="KonaFilter image-container display-table"><div><div class="image on-image">Yuri Gripas/Reuters</div></div></div><ul class="summary-list"><li>Two CIOs who manage a combined $248 billion for Franklin Templeton say the Federal Reserve missed a big opportunity to reassure nervous investors about the health of the economy.</li><li>Fixed income chief investment officer Sonal Desai and multi-asset solutions CIO Ed Perks say the Fed could have driven home a message that conditions are good and any cuts in interest rates are just insurance.</li><li>Without that message, investors have grown even more certain that repeated rate cuts are needed and are coming - and they might be rattled if the Fed proclaims its confidence in the economy later.</li><li><a href="https://www.businessinsider.com/prime?module=article&amp;area=summary">Click here for more BI Prime stories</a>.</li></ul><a href="https://markets.businessinsider.com/news/stocks/stocks-rise-after-fed-chair-jerome-powell-signals-rate-cuts-to-come-2019-7-1028344999">Stocks soared to all-time highs</a> after Federal Reserve Chair Jerome Powell essentially promised that the Fed will cut interest rates. But that could be less important than the things he chose not to say.Sonal Desai, the chief investment officer of Franklin Templeton's fixed income group, and Ed Perks, the CIO for Franklin Templeton Multi-Asset Solutions, told Business Insider that the Fed failed to drive home the message that the US economy is healthier than Wall Street believes."He should have at least acknowledged that the data was decent and potentially there was too much concern, or emphasized the insurance nature of a rate cut," said Desai, whose business manages $152 billion.She says the combination of <a href="https://markets.businessinsider.com/news/stocks/jobs-report-payrolls-and-wages-in-june-2019-7-1028332289">good jobs data</a> and <a href="https://markets.businessinsider.com/news/stocks/trump-xi-meeting-g20-june-us-china-trade-war-ceasefire-2019-6-1028318823">a lull in the trade war</a> presented a major opportunity for Powell and the Fed to put things in perspective at a time fallout and market volatility would have been contained."Especially with equity markets at now highs, I just think the opportunity was there to do it," said Perks, who oversees $96 billion of assets.Read more: <a href="https://www.businessinsider.com/us-china-trade-war-truce-overshadowing-other-global-conflicts-2019-6">Don't be fooled by Trump's trade-war truce with China. Experts across Wall Street say the fight is spreading around the world</a>While at least one rate cut looks certain, Desai and Perks said context is crucial. If Powell had emphasized that the economy is faring well and the Fed is just being cautious, investors might have focused on the good news of steady - if not slowing - growth.Without that reassurance, investors may conclude that the economy is in danger and only rate cuts can prevent a recession. That also means they'll want lower rates, leaving the Fed with less room to cut rates in the event of a recession later on."There were several missed opportunities to guide the market away from what I think are exaggerated expectations for rate cuts when they're burning through dry powder," Desai said.And they say there's a second problem. Since Powell didn't deliver that message at the best possible time, he might have to try telling investors that the economy is healthy when they're already convinced it's not.Something similar occurred in October 2018, when traders felt the Fed wasn't attentive enough to the market's risks and was intent on raising interest rates.Instead of emphasizing the health of the economy, Powell seemed to play up risks like <a href="https://markets.businessinsider.com/news/stocks/stocks-dip-before-jerome-powell-testimony-fear-no-rate-cuts-2019-7-1028341245">the US-China trade war and a slowing global backdrop</a>. He was pessimistic enough that Perks wondered if he had bigger concerns."The absence of it leads one to believe maybe there is something eroding more significantly that maybe we're not privy to," said Perks. <div class="margin-top"> <h3>NOW WATCH: <a href="https://www.businessinsider.com/why-american-men-suck-soccer-world-cup-2018-6">The US women's national team dominates soccer, but here's why the US men's team sucks</a></h3> <div> </div> </div>

'Missed opportunities': Two experts who manage a combined $248 billion explain how the Fed has made a series of mistakes that could create panic down the line

<ul class="summary-list"><li>Shawn Wooden is at the forefront of an investor-driven push for more diversity on Wall Street.</li><li>He's required disclosures that revealed a lack of Black and Hispanic talent at big money managers.</li></ul>When giant asset managers get a phone call from a state treasurer located more than 100 miles from Wall Street, they know they're in for some tough questions. That's because the money managers seeking to do business with Connecticut's $44 billion pension system have to go through Shawn Wooden, the sole trustee of those assets. In the almost three years since he's been sworn in as state treasurer, Wooden, 52, has turned up the pressure on money managers to not only disclose their diversity statistics but make them public. And they've done just that — even when they know that what they disclose won't be pretty. "Most of these institutions are not where they could or should be on this," Wooden said in an interview with Insider. "So it's uncomfortable." Many companies publish some level of workforce-diversity data in annual corporate-responsibility reports, but those figures rarely disclose specifics on the representation of Black and Hispanic staff at asset-management firms, especially at the executive level. Wooden requires would-be managers to disclose data on a much more granular level — showing the gender, racial, and ethnic makeup of their workforces by job type and seniority level over a three-year period — before he makes a decision on whether to invest in their funds.In his role, he has persuaded industry giants such as <a href="https://www.businessinsider.com/carlyle-group-executive-diversity-data-inclusion-black-latinx-asian-2021-5">The Carlyle Group</a>, <a href="https://www.businessinsider.com/morgan-stanley-investment-managements-diversity-is-still-at-2019-levels-2021-9">Morgan Stanley Investment Management</a>, and Wellington Management to respond to his requests, which have revealed glaringly low numbers of Black and Hispanic staff in senior roles.Connecticut has requested this kind of workforce data from money managers and other business partners with the state since the early 2000s, Wooden said. But those who know him say he can take a big chunk of the credit for pushing asset managers to disclose uncomfortable truths. "He is very smart and strategic in his investment decisions for the state in our pension fund, but he's also an extraordinary advocate and champion of equity in our social and economic system," Sen. Richard Blumenthal (D-Conn.) said of Wooden. "He's really a leader in a national movement for more transparency and disclosure." Wooden has his work cut out for him. Almost 84% of executives employed by the US asset-management industry were white, while almost 75% were male, a recent <a href="https://www.ici.org/system/files/attachments/pdf/21_news_di_chart_01.pdf">survey</a> by the Investment Company Institute and the compensation-data provider McLagan indicated. The organizations polled 65 asset-management firms representing $21.9 trillion in assets under management. While Connecticut was an early mover, other investors, Congress, and even regulators have now taken a keen interest in firms' diversity track records. In recent years, the Securities and Exchange Commission has <a href="https://www.sec.gov/news/press-release/2018-7">begun asking</a> that regulated entities voluntarily disclose their diversity data to the agency. Meanwhile, institutional investors, and the investment consultants who advise them, have also ratcheted up the pressure they're putting on the asset managers they invest in to do better at diversity and inclusion. In Washington, DC, legislators have repeatedly put Wall Street chief executives <a href="https://fortune.com/2021/05/27/congress-grills-wall-street-on-ceo-diversity-again/">in the hot seat</a> over a lack of diversity. Wooden, who was sworn in on January 9, 2019, is currently the only Black elected state treasurer in the U.S. as well as the only Black elected official in New England who is serving statewide. Beyond his work overseeing the state's pension assets, he's at the forefront of a larger movement to improve diversity in the financial-services industry. In a May 2020 <a href="https://www.courant.com/opinion/op-ed/hc-op-wooden-racism-george-floyd-0530-20200530-g6ttjede4ng5fpvefeh5q23syu-story.html">op-ed</a> in the Hartford Courant, Wooden detailed how, as the father of Black teenagers, he'd had "the talk" with his elder son, prompted after Wooden was "pulled over for allegedly turning without signaling.""Many Black parents have accepted the necessity of warning their kids about driving while Black, and what to do in the event they are stopped. It is a dreaded ritual for us — it's so difficult to explain to our children the danger they may face when venturing out beyond our reach," Wooden wrote. The treasurer called out the "inconsistent protections" of the criminal-justice system for Black Americans in the op-ed, which was published soon after the murder of George Floyd. But he also said that Wall Street had its own role to play in the country: "It is time for the wealthy and privileged to start pulling the levers of power they hold. Wall Street and corporate America, I'm speaking to you."He mentioned that Franklin Templeton, a money manager for Connecticut's pension funds, "took swift and transparent action" in firing Amy Cooper last year, after a video went viral of her calling 911 on Christian Cooper, a Black bird-watcher in Central Park.Months after the piece was published, Wooden and the Ford Foundation formed a coalition of CEOs in financial services, including Jenny Johnson, Franklin Templeton's chief executive, to tackle racial economic disparities. Members of the Corporate Call to Action working group <a href="https://portal.ct.gov/-/media/OTT/Press-Room/Press-Releases/2021/PR021121-CorporateActionCoalitionEquityOpportunityCommitmentDiscloseWorkforceData.pdf">pledged</a> to disclose the diversity data they filed with the Equal Employment Opportunity Commission this year, including AllianceBernstein, Franklin Templeton, Invesco, and Wellington Management. The companies joined other members of the coalition, including BlackRock, Goldman Sachs, Morgan Stanley, and State Street Global Advisors, that already disclose this workforce data. All private employers with 100 or more employees are required to report this data to the commission annually. The data provides a snapshot of firms' demographic breakdown by race, ethnicity, and gender, as well as across job categories.Insiders say the Hartford native brings a perspective and a passion for the issue that was seeded decades ago."He's always been active in creating pipelines of diversity," said Arunan Arulampalam, who ran against Wooden for state treasurer in 2018 and now serves as the chief executive of Hartford Land Bank. "He grew up as a Black man in Hartford. We are a city that has experienced generations of disinvestment, which is related, I think, to the fact that we've become an increasingly Black and brown city."<h2>'Really bright, but really intense'</h2>Wooden, the youngest of six children, participated in Hartford's desegregation busing program in the third grade. He went on to earn a four-year scholarship to Trinity College, a private liberal-arts college located southwest of downtown. After Trinity, Wooden got involved in politics, working for Carrie Saxon Perry during her time as mayor of Hartford. Perry was the first Black woman to be elected mayor of a major New England city and had been a mentor to Wooden, said Anthony Gray, the president and CEO of Austringer Capital Group, a real-estate-development company in Madison, Wisconsin. Gray has known Wooden for more than 30 years, since the treasurer's Trinity College days."He's been working on racial-equity issues since we were kids, and he was an important part of the electoral machine for Carrie Saxon Perry," Gray said. "She was a friend and a mentor to him since he was a very young man, but she also ran on a platform of diversity, equity, and inclusion — and that was long before we even knew what those words meant."Wooden earned a law degree at New York University, where he became close friends with another trailblazer — Rep. Hakeem Jeffries, the chair of the House Democratic Caucus. In 1997, Wooden began working at law firm Day, Berry &amp; Howard LLP (now called Day Pitney LLP). In 2001, he left Hartford for New York, after his then-wife was hired as an internist at New York-Presbyterian Hospital. At the time, an editorial writer for the Hartford Courant lamented the departure of the "Can't Miss Kid" and said he was "arguably the brightest prospect in a thin pool of young lions looking to ascend politically in the city." Wooden, who is now divorced, continued to work for Day Pitney during his time in New York and after his return to Hartford in 2007. Prior to running for state treasurer in 2018, he was a partner at Day Pitney and led the firm's public-pension-plan investment practice. Arulampalam, who also served as the former deputy commissioner for Connecticut's Department of Consumer Protection, said he was a summer intern at Day Pitney when he first met Wooden years ago. During his time at Day Pitney, Wooden was active in increasing the diversity at the firm, as well as in the legal profession more broadly, Arulampalam said. "Diversity and equity have mattered to him all of his life," he said. "I remember thinking then that when partners talked about individuals who had a commitment to diversity, they all talked about Shawn. They mentioned that he took paternity leave when one of his kids was born. He came up a lot as someone who cared deeply about diversity and tried to act it out."Gray, who worked as an associate at Day Pitney from 2007 to 2010, said he saw two sides of Wooden's personality when they worked together. "It's funny. As a person, he is pretty laid-back," Gray said. "As an attorney, he was really bright, but really intense."But that intensity served Wooden well, Gray added. "In bond work, you get it wrong, and a whole business can go bankrupt. The margin for error is close to zero," Gray said. "You don't get to make mistakes. He practiced in a really complex area of law and made it look easy. He's a really sharp guy."Gray said Wooden has applied that level of discipline to his political career."In politics, you have to develop a message and stay on message," he said. "To do it well, it's harder than it looks, and Shawn is exceptionally good at it. He's just an incredibly disciplined person."<h2>Wielding his power as an investor</h2>Wooden acknowledged that he has benefited from the work of his predecessors. While some firms, such as BlackRock, have recently begun to <a href="https://www.blackrock.com/corporate/literature/continuous-disclosure-and-important-information/blk-eeo1-data-disclosure.pdf">voluntarily publish</a> data on the ethnic and racial diversity of their workforce, public officials in Connecticut have been pushing companies to disclose this data even before Wooden's tenure as treasurer.Wooden's predecessor, the former State Treasurer Denise Nappier, laid the foundation for work he continues. Arulampalam said Nappier also had a reputation for holding companies that wanted a slice of Connecticut's business accountable to diversity standards. "She was really a leader in pushing her firms to improve their own numbers," Arulampalam said. Wooden said his efforts have gotten a boost from how the treasurer's office is structured in his home state. Given his authority as sole trustee of the Connecticut Retirement Plans and Trust Funds, a system that comprises six state pension funds and nine state trust funds, he can make diversity disclosures a priority for vendors seeking business with the state without the support of legislation, he said."There's more flexibility for me to proceed" when it comes to incorporating these policies into the pension system's operation than in some other states, Wooden said. For some state treasurers who care about these issues, "it becomes helpful to have legislation passed and making certain things requirements," he explained. So far, the work that Wooden and others have done to increase transparency in the financial-services industry has appeared to yield results — or at least concrete commitments to improve. Financial firms that have publicly shared the diversity data they reported to the Equal Employment Opportunity Commission, such as BlackRock and <a href="https://www.citigroup.com/citi/about/esg/download/2020/diversity_2020_english.pdf">Citigroup</a>, have set workforce-representation goals with timelines and have agreed to undergo racial-equity audits of their businesses.Wooden is taking his mission to advance racial equity beyond Wall Street. On June 30, he signed into law <a href="https://portal.ct.gov/-/media/OTT/Press-Room/Press-Releases/2021/PR070121----CtMakesHistoryTodayCtBabyBondsforCtChildrenintoPoverty.pdf">CT Baby Bonds</a>, a program aimed at narrowing the wealth gap by creating savings accounts for children born into poverty. The measure made Connecticut the first state in the nation to pass so-called baby bonds. Blumenthal has cosponsored federal legislation on baby bonds, which inspired the Connecticut law. "His spearheading the baby-bond proposal in effect creates a nest egg that helps disadvantaged people seek the American dream," Blumenthal said. Tina Byles Williams, the CEO, CIO, and founder of Xponance, a money manager in Philadelphia with more than $12 billion under management, called Wooden's diversity requirements laudable. "We need allocators like the treasurer," said Byles Williams, who counts Connecticut Retirement Plans and Trust Funds as a client. "He insisted on transparency and accountability. His legal background coupled with a passion and an interest around moving the needle, with respect to diversity — both of those need to be housed in the person, and I think that is what we are seeing with Treasurer Wooden." Blumenthal said allocators such as Wooden ultimately hold the most sway when it comes to driving change. "States have power because they are an investor," Blumenthal said. "Sometimes these asset-management companies care more about their investors than they do members of Congress." And Wooden isn't afraid to wield that power. Connecticut has pushed for more revelatory data on the number of minorities at some of the industry's biggest players, and some of them have played ball. Earlier this year, Morgan Stanley Investment Management pitched the state on a $375 million investment in a real-assets fund. As part of that, the firm filled out Connecticut's compliance review, disclosing that Black and Hispanic employees accounted for 2% and 3%, respectively, of US employees at the executive level in its investment-management unit. A Morgan Stanley spokesperson declined to comment in September when Insider first reported the details. Other managers have reported similar figures when answering the state's compliance-review questions as part of their own pitch for the state pension's money or as part of continued due diligence each year as an existing manager. In May, Insider reported that the private-equity giant The Carlyle Group employed less than 3% of US staffers at the managing-director level or above who were Black. At Wellington Management, a money manager in Boston that oversees $1 trillion in assets, Black employees accounted for 0.75% of US executive-level employees, as of December 2019. Wellington declined to provide more recent figures to Insider, but it said the firm plans to release global workforce-diversity data in a transparency report in January.While firms may not be eager to share their workforce data with Connecticut — and have their paltry diversity figures laid bare — Wooden said getting the data was "typically not a problem" in the end. He added that leaning into that discomfort was a critical first step for managers to change. "It demonstrates a level of commitment and interest, and it leads to more accountability for the institution," he said.He recalled only one money manager that required more prodding. "They clearly wanted our business but had never disclosed demographic data," Wooden said. "I got involved and said, 'I don't know what your numbers are going to look like. It's probably not good, but that's beside the point. We're requiring this because we believe in the importance of transparency.'" Wooden said the firm eventually coughed up the numbers, but he declined to name the manager. "I have no desire, unless I need to, to embarrass people," he said. "I'm trying to move the needle here on these issues. It's a success story because they advanced as an organization. Yes, they were pushed to do so, but I think they will agree that they will be better for it." Dakin Campbell contributed to this report.

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