The market regulator, Securities Exchange Board of India (SEBI) is examining whether fund managers at Axis Mutual Fund engaged in "front-running" or trading securities through their personal accounts ahead of the fund's transactions, multiple reports said.
SEBI considers front running to be one of the most serious offences.
What is front running?
Front running is when a broker has exclusive details of a stock being bought or sold in large quantities and trades that stock to benefit from it. The practice is illegal in India
Axis MF removes two fund managers
In reaction, Axis Mutual Fund has removed the two fund managers from managing any of its funds pending investigations.
The officials involved in the case under investigation are Viresh Joshi and Deepak Agarwal.
Joshi was the head dealer and fund manager of five of the mutual fund schemes at Axis Mutual Fund, while Agarwal was an equity research analyst and fund manager for three mutual fund schemes.
The fund house Axis Mutual Fund manages Rs 2.59 trillion worth of assets.
"Axis AMC has been conducting a suo moto investigation over the last two months (since February 2022). The AMC has used reputed external advisors to aid the investigation," Axis Mutual Fund said in a statement.
As part of the process, two fund managers have been suspended pending investigation of potential irregularities, it said in the statement.
"We take compliance with applicable legal/regulatory requirements seriously, and have zero tolerance towards any instance of non-compliance. The media is requested not to give credence to market speculation and idle gossip, which are baseless and we strongly refute the same," it added.
