One of the mutual fund firms used by the BF&M golden accumulator pension scheme is being sued by Harvard University.

Harvard Management Company, which handles the college's 18 billion endowment filed a lawsuit in early February against Franklin Templeton for failing to protect shareholders and also accused Franklin's board of directors of breaching its fiduciary duties.

Franklin Templeton's Mutual Beacon and European Fund manager, Matthew Haynes was recently a keynote speaker at the Anchor Investment Forum in Bermuda in November 2002.

The fund's main sale pitch to Bermuda investors was shareholder value sometimes through shareholder activism. "We're not afraid to shake the tree in order to harvest the fruit," said Mr. Haynes.

But the company which professes to stand for shareholder value is now under fire for blocking action on the part of investors in their own China fund.

According to the Financial Times, Mark Mobius, manager of Templeton's China fund, is "standing by while Franklin tries to take away a proposal from shareholders".

An FT article described how Harvard, a 30 per cent shareholder in the Templeton China fund, had urged other shareholders to oust Templeton and its manager for not rectifiying the closed-end fund's big discount to its net asset value.

In other words, Harvard believe that the underlying assets of the fund are worth more than the current trading price of the fund. "The China fund's shares have traded at an average discount of 14 per cent in the past 12 months" wrote Julie Earle in New York.

When Franklin proposed that the fund should be opened up to new subscribers, Harvard sent out proxy materials in January to shareholders, to reject this initiative. Franklin then accused Harvard of violating securities laws by filing "knowingly and materially false statements."

Harvard have now struck back with a counterclaim that the fund are trying to deprive their shareholders of their rights.

It somewhat undermines what Bermuda investors heard about Franklin Templeton's motto: "we want our investors to eat well and sleep well."