Updated: May 7, 2022 12:38:34 am
Axis Asset Management Company, the mutual fund promoted by Axis Bank, has suspended two of its fund managers for alleged irregularities suspected to involve several crores of rupees, including front-running transactions on their personal accounts.
Sources said the Securities and Exchange Board of India (Sebi) is likely to take action after an inhouse investigation by the fund house. Axis Mutual Fund manages assets worth Rs 259,818 crore under various schemes. The company said, “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 towards any instance of non-compliance.”
The two officials have been identified as Viresh Joshi and Deepak Agarwal, sources said, adding they are alleged to have been involved in front-running in nine scrips with the profit running into several crores. “Axis AMC has been conducting a suo motu investigation over the last two months (since February 2022). The AMC has used reputed external advisors to aid the investigation,” the fund house said in its statement.
Front-running, which is illegal in India, involves purchasing a stock based on advance exclusive information regarding an expected large transaction that will affect its price. Sebi has categorised front-running as a form of market manipulation and insider trading, and penalised several fund houses and fund managers in the past over this activity.
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“The investigation by Sebi will bring out the extent of irregularities at Axis AMC. Axis AMC has already briefed its parent Axis Bank about the incident,” said sources.
Last December, a fund manager of Deutsche Mutual Fund paid nearly Rs 5 crore to settle with Sebi a case of alleged front-running in trades. The amount included settlement charges, wrongful gains and interest charged on the alleged ill-gotten gains.
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