Thank you for sharing!

Your article was successfully shared with the contacts you provided.
NAME AND TITLE: Murray L. Simpson, executive vice president and generalcounsel of Franklin Resources Inc. AGE: 65 THE COMPANY: Franklin Resources Inc., based in San Mateo, Calif., is oneof the country’s largest mutual fund organizations. It manages more than240 separate funds for stocks; tax-exempt and taxable money marketinstruments; and corporate, municipal and U.S. government bonds. Thecompany, which employs more than 6,400 employees in 29 countries, hadmore than $270 billion in assets under management as of June 30. DEPARTMENT: Franklin Resources has 42 lawyers worldwide, including 12outside the United States. About half of the legal work involves matterssurrounding the Investment Company Act of 1940. The law, which requiresthe regulation of investment companies by the U.S. Securities andExchange Commission, sets the operating standards for mutual funds. Suchmatters include reporting requirements, pricing and promotion and theallocation of investments within a fund’s portfolio. “We’re dealing with things funds can and cannot do day to day. It’s aspecialized area of the law,” Simpson said. Another large part of the department’s work — perhaps as much asone-fifth — deals with the Investment Advisers Act, legislation that waspassed in 1940 to protect consumers from misrepresentations or fraud byinvestment. Other compliance work involves making sure the advertisingand marketing materials meet the requirements of the NationalAssociation of Securities Dealers (NASD). Simpson said the corporate scandals have had minimal impact on the legaldepartment. “Fortunately that has not been an issue with our company.Our portfolio managers and analysts have likely increased their duediligence on companies they invest in, but that is their responsibility,not legal,” he said. The biggest impact on the legal department has comefrom the new anti-money-laundering requirements under the USA PatriotAct. As yet, it is not certain what the effect of the new Sarbanes-OxleyAct will be, he said. LITIGATION: Simpson said Franklin Resources has “no major litigation asof this minute. Our business is so regulated and we’re a risk-aversecompany. We spend a lot of time staying out of trouble.” A year ago, Daniel Calabria, the former president of Templeton FundsManagement in St. Petersburg, Fla., won more than $850,000 in anarbitration award related to the circumstances of his firing in 1992.Calabria, who was let go after Templeton Galbraith & Hansberger Ltd.merged with Franklin Resources, said he was told he was not fully vestedin restricted Templeton stock. But the NASD sided with Calabria that hebecame vested under a change-in-control provision. In April, the company settled a class action in the U.S. District Courtfor the Southern District of Florida that was brought in 1998 againstofficers and directors of a fund, the Templeton Vietnam OpportunitiesFund Inc. (now called Templeton Vietnam and Southeast Asia Fund Inc.)and certain Franklin Resources subsidiaries. Shareholders claimed the value of the Templeton Vietnam fund tumbled invalue after manager Mark Mobius began investing in Thailand withoutapproval from shareholders. The $6.5 million settlement involved noadmission of wrongdoing by Franklin. The company also recently settled for an undisclosed amount a classaction in the U.S. District Court for the Southern District of Illinoisagainst 48 investment advisers and fund distributors, including FranklinAdvisers Inc. and Franklin Templeton Distributors Inc. The 2001 suit,brought by lead plaintiff Richard Nelson, alleged that the defendantshad engaged in unlawful control of the directors of the funds (who arerequired to be independent) and entered into unlawful distributionplans. The suit, which claimed the advisors and distributors receivedexcessive advisory and distribution fees, alleged violations of theInvestment Company Act of 1940 and breach of common law fiduciary duty. “The Nelson suit could have been a big pain in the neck in terms ofpaperwork. It would have been a big, time-consuming project,” Simpsonsaid. ACTIVIST FUND MANAGER: From time to time, Franklin Resources, as aso-called activist fund manager, becomes a plaintiff. Last year, itjoined two other major mutual fund companies in suing health care giantTenet Healthcare Corp. of Santa Barbara, Calif., for $100 million in LosAngeles Superior Court. The funds allege Tenet covered up problems atthe French Hospital in San Luis Obispo, Calif., so it could be sold toVista Hospital Systems. Vista issued $53.2 million in bonds for thepurchase, which were held by Franklin Resources, Putnam Investments andMorgan Stanley Dean Witter Van Kampen funds. The suit is pending. BIGGEST CRISIS: When terrorists struck on Sept. 11, Fiduciary TrustInternational — Franklin’s subsidiary — had 555 employees at work in thecompany’s headquarters at Two World Trade Center. Eighty-seven Fiduciaryemployees died in the attacks. “It was horrible,” said Simpson. “It made last year really difficult.”Besides grieving for fellow employees, the legal department had a fairamount of work involving human resources issues and legal claims. Muchof the work involved restoring Fiduciary Trust’s lost files anddocuments. The legal staff had to determine which documents needed to berecreated. “Compared to that there’s nothing else,” Simpson said. ROUTE TO THE TOP: Simpson admits he went off the beaten path to reachhis current job as general counsel, actually leaving the practice of lawin the 1990s after three decades to become a chief executive. At thetime, he was in his late 50s. After graduating from DePaul UniversityCollege of Law in 1961, the Chicago native went to work for the U.S.Securities and Exchange Commission until 1964, before going into privatepractice. He began representing Franklin Resources in 1971 while withhis own firm, Simpson & Shefsky. Based in New York, Simpson was FranklinResources’ principal outside counsel and a member of the board. In 1991, Simpson decided to get out of private practice. He joinedPasadena Capital Corp., an investment firm based in Pasadena, Calif., asexecutive VP and general counsel. Later, he got a call from Charles B.Johnson, chairman and chief executive of Franklin Resources. He joinedTempleton Franklin Investment Services (Asia) Ltd. in 1994 as managingdirector and CEO. He agreed to move to Hong Kong for three years. “It was all new to me,” said Simpson. “I was learning on the job. It was a great experience. I regret only that I didn’t do it sooner.” The three years “came and went” and Simpson ended up staying nearly sixyears. By 2000, Simpson was thinking of retiring and had no plan to goback to the legal profession. When he was asked to be general counsel ofFranklin Resources, he accepted. OUTSIDE COUNSEL: The main outside counsel are Philadelphia-basedStradley, Ronon, Stevens & Young; Weil, Gotshal & Manges in New Yorkhandles corporate matters; New York’s Skadden, Arps, Slate, Meagher & Flom takescare of banking issues; Los Angeles-based Paul, Hastings, Janofsky & Walker, securitiesissues and labor; and San Francisco-based Pillsbury Winthrop, trademark and corporatematters. FAMILY: He and his wife, Barbara, have three children. LAST BOOK READ: “John Adams,” by David McCullough.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.