Franklin Advisory Services, Llc

Allegations: ON JULY 2, 2020, THE SEC ENTERED AN ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTION 9(F) OF THE INVESTMENT COMPANY ACT OF 1940 (THE "INVESTMENT COMPANY ACT") AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 (THE "ADVISERS ACT"), MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER AGAINST REGISTRANT (THE "ORDER"). IN THE ORDER, THE SEC FOUND THAT (1) BETWEEN DECEMBER 2014 AND NOVEMBER 2015, REGISTRANT CAUSED CERTAIN FRANKLIN TEMPLETON FUNDS IT MANAGES (THE "FUNDS") TO INVEST IN SHARES OF THREE UNAFFILIATED EXCHANGE-TRADED FUNDS ("ETFS") IN EXCESS OF THE 10% INVESTMENT LIMIT UNDER SECTION 12(D)(1)(A)(III) OF THE INVESTMENT COMPANY ACT; (2) REGISTRANT DID NOT IMPLEMENT CERTAIN OF THE FUNDS' POLICIES AND PROCEDURES DESIGNED TO PREVENT SUCH VIOLATIONS, THEREBY CAUSING THE FUNDS TO VIOLATE RULE 38A-1(A) OF THE INVESTMENT COMPANY ACT; AND (3) IN DETERMINING NOT TO REIMBURSE THE FUNDS FOR LOSSES THAT RESULTED FROM THE CORRECTIVE SALE OF ONE OF THE ETFS BY OFFSETTING GAINS REALIZED FROM THE CORRECTIVE SALE OF TWO OTHER ETFS, REGISTRANT DID NOT FOLLOW ITS POLICIES AND PROCEDURES AND DID NOT DISCLOSE MATERIAL INFORMATION TO THE RELEVANT FUNDS' BOARD, THEREBY VIOLATING SECTION 206(2) AND SECTION 206(4) AND RULE 206(4)-7 OF THE ADVISERS ACT. REGISTRANT LATER REPORTED THE LOSSES TO THE FUNDS' BOARD AND FULLY REIMBURSED THE RELEVANT FUNDS FOR THE LOSSES INCLUDING INTEREST. REGISTRANT NEITHER ADMITTED NOR DENIED THE SEC'S FINDINGS. Status: Final Sanction Detail: REGISTRANT CONSENTED TO ENTRY OF A CEASE-AND-DESIST ORDER, AND AGREED TO PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $250,000. THE SEC ALSO IMPOSED A CENSURE ON REGISTRANT. Summary: WITHOUT ADMITTING OR DENYING THE FINDINGS IN THE ORDER, REGISTRANT CONSENTED TO ITS ENTRY. ON JULY 2, 2020, THE SEC ENTERED THE ORDER