Update: 6 May 2022 15.50 hrs to include a response from Axis MF
Axis Mutual Fund (MF) has removed its head trader Viresh Joshi as fund manager from five schemes. Similarly, Deepak Agarwal, the assistant fund manager for equity at Axis MF, is no longer part of schemes like Axis Consumption ETF, Axis Quant Fund and Axis Value Fund.
While there is no other information from the fund house, Axis MF trustees and directors of the asset management company (AMC) must come clean on the reasons for the change because both traditional media and social media are agog with all kinds of stories of malpractices. Here are a couple of tweets:
A newspaper report, which does not name any person or fund, says, "Bloomberg IDs of both the officials have been deactivated. This means both of them are not allowed to be involved in the fund's investment activity."
Quoting sources, the report says, "...the fund manager punched in trades on behalf of the MF at values that were way higher than the market and received kickbacks from brokers. His flashy lifestyle had also raised eyebrows in the market. He is said to be driving a luxury sports car though it is not clear if he owned it."
In its MF Insider segment, Moneycontrol.com says
, "The mutual fund industry is abuzz with whispers of an audit by market regulator SEBI into front-running cases within a top-tier asset management company. And if you are curious as to how it came to light, the tale is certain to elicit chuckles. The main accused, the dealer — a resident of the north-eastern suburbs of Mumbai — has been painting the town red in a Lamborghini, and with only limited units of the luxury race car sold, it didn't take long to narrow down on this scam."
Axis MF has changed fund managers for seven of its schemes, Axis Arbitrage Fund, Axis Banking ETF, Axis Consumption ETF, Axis Nifty ETF, Axis Quant Fund, Axis Technology ETF, and Axis Value Fund. Mr Joshi has been removed from five of these schemes, Axis Arbitrage Fund, Axis Banking ETF, Axis Consumption ETF, Axis Nifty ETF and Axis Technology ETF.
According to media reports, market regulator, Securities and Exchange Board of India (SEBI) is examining whether fund managers at Axis MF engaged in 'front-running' or trading securities through their personal accounts ahead of the fund's transactions.
Axis Bank Ltd, the third-largest private sector bank in India, holds a 74.99% stake in Axis MF, with Schroder Singapore Holdings Pvt Ltd holding the rest.
Axis Mutual Fund was set up in 2009. MD & CEO Chandresh Nigam and Viresh Joshi have been part of the original team.
We sent emails and messages to Axis Bank officials as well as to Mr Joshi. There was no response till writing this story. We will update the story as and when we receive any response from Axis Bank and Mr Joshi.
In a statement, Axis MF says it has been conducting suo moto investigation in the matter since February 2022 and used reputed external advisors to aid the investigation. "As part of the process, two fund managers have been suspended pending investigation of potential irregularities. We take compliance with applicable legal and 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.