Franklin Resources

(BEN) - Get Report

agreed to pay $20 million Monday to settle

Securities and Exchange Commission

charges over its dealings with brokerage firms.

The nation's fourth-biggest money manager neither admitted to nor denied the charges. The SEC alleged that two Franklin units used fund assets to pay brokerage firms for pushing Franklin Templeton funds on clients in a practice known as paying for "shelf space."

The two subsidiaries, Franklin Templeton Distributors and Franklin Advisers, were alleged to have had shelf space agreements with 39 broker-dealers between 2001 and 2003. During that period, FTDI allocated $52 million from brokerage commissions related to trades of fund shares (which were fund assets) to the broker-dealers -- in exchange for shelf space -- without adequately disclosing these agreements to the fund boards or the fund shareholders, the SEC said.

Franklin Advisers was required, but failed, to disclose adequately the arrangements to the boards so they could approve this use of fund assets, and to shareholders so they could be informed when making investment decisions, the agency said.

"This settlement reiterates the importance of proper disclosure to the fund boards. Franklin's boards did not have sufficient information to assess the effectiveness of the advisers and distributors hired on behalf of the fund shareholders," said Linda Chatman Thomsen, deputy director of the SEC's division of enforcement.

On Monday, Franklin rose 75 cents to $68.60.