Axis AMC sacks its chief dealer under probe for lapses

Axis Asset Management Company, the mutual fund promoted by Axis Bank, has sacked its chief dealer Viresh Joshi, who was under investigation for irregularities, including front-running the AMC’s transactions on their personal accounts.

“Axis AMC has been conducting a suo moto internal investigation since February 2022, using reputed external advisors to assist with this ongoing investigation. Further to our investigation, his conduct and following the decision to suspend him, the employment of Viresh Joshi has been terminated with effect from May 18, 2022,” a statement from Axis Mutual Fund said.

“Accordingly, Viresh Joshi ceases to be a ‘Key Person’ of Axis AMC,” it said.

On May 6, Axis AMC suspended two fund managers — Viresh Joshi and Deepak Agarwal. The irregularities running into several crores at the fund house have also come under the scanner of market regulator Sebi which is likely to take suitable action after the inhouse investigation by the fund house.

“As part of the process, two fund managers have been suspended pending investigation of potential irregularities. We take compliance with applicable legal/regulatory requirements seriously, and have zero tolerance towards any instance of non-compliance,” the fund house said in a statement on May 6.

Axis Mutual Fund manages assets worth Rs 259,818 crore under various schemes.

According to sources, Joshi was engaged in front-running the AMC’s transactions. Front-running, which is illegal in India, involves purchasing a stock based on advance non-public information regarding an expected large transaction that will affect the price of the share. When mutual funds make a big order, some fund managers buy the same shares in their personal accounts before executing the MFs’ order. When MFs purchase in huge quantities, the price of the share is expected to go up.

Sebi has categorised front running as a form of market manipulation and insider trading because a person who commits a front running activity expects security’s price movements based on the non-public information. Sebi has investigated and penalised several fund houses and fund managers in the past for front-running.

According to market sources, front-running has been very common in mutual fund houses and foreign portfolio investors.

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