The Securities and Exchange Board of India (Sebi) on Tuesday barred Viresh Joshi, former chief dealer at Axis Mutual Fund (MF), and 19 others from accessing the capital markets for their alleged front-running trades carried out by the fund house to make crores of wrongful gains.
The regulator ordered the impounding of Rs 30.6 crore — total wrongful gains earned from front-running activities.
“Senior functionaries like (Viresh) Joshi, discharging a sensitive job like that of a dealer of a reputed MF, when playing mischief with trades of the MF in collusion with his associates as part of a well-calculated scheme, deserve to be dealt with a firm hand,” said Sebi whole-time member S K Mohanty in a 96-page ex-parte order.
Investigation into the trades of Axis MF between September 1, 2021, and March 31, 2022, showed alleged violations of the provision of the Sebi (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations.
The modus operandi involved passing sensitive non-public information about impending large orders of Axis MF to its associates by Joshi. The associates created stock positions so that they benefited from the impact on the stock price due to large orders by Axis MF.
Joshi used two different mobile numbers to evade scrutiny by the fund house and even routed some orders from Dubai, reveals the Sebi order.
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Sebi states that connected entities to Joshi helped in arranging trading accounts for placing trade orders online with his instructions. Further, his connected entities, namely Sumit Desai and Pranav Vora, introduced him to Dubai-based Prijesh Kurani who simultaneously placed orders in these trading accounts.
Sebi may impose further penalties later upon hearing submissions from alleged violators. It has provided 21 days for entities mentioned in the show cause notice to file a response with the regulator.
The markets regulator has also asked banks and intermediaries to ensure no remittances are done from the noticees’ accounts, demateraliased and MF units without permission from Sebi.
