Axis Asset Management, a mutual fund promoted by Axis Bank, has fired its main dealer Virish Joshi, who was under investigation for wrongdoing, including managing AMC transactions on their personal accounts.
Axis AMC has been conducting an internal investigation since February 2022, hiring reputable outside consultants to assist in this ongoing investigation. In addition 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.”
Accordingly, Veresh Joshi is no longer a ‘key figure’ at Axis AMC.
On May 6, Axis AMC suspended the fund managers – Viresh Joshi and Deepak Agarwal. Violations of up to several crore in the fund of funds have also come under the scanner of the market regulator SEBI which is likely to take appropriate action following an internal investigation by the fund house.
As part of the process, two fund managers have been suspended pending investigations into possible wrongdoing. The fund said in a statement on May 6: We take compliance with applicable legal/regulatory requirements very seriously, and have zero tolerance for any instance of non-compliance.
Axis Mutual Fund manages assets of Rs 259,818 crore under various schemes.
As per sources, Joshi was involved in managing AMC transactions. An initial run, which is illegal in India, involves the purchase of a share based on prior non-public information regarding an anticipated large transaction that will affect the share price. When mutual funds place a large order, some fund managers buy the same shares in their personal accounts before executing the MFs order. When you buy MFs in huge quantities, the stock price is expected to go up.
SEBI classified forward running as a form of market manipulation and insider trading because a person who commits forward activity anticipates stock price movements based on non-public information. Sebi has investigated and sanctioned many fund houses and fund managers in the past for running.
According to market sources, being on top was very common in mutual fund houses and foreign portfolio investors.