Axis MF Trustees and Directors of the AMC Need To Come Clean on Rumours about Massive Malpractices
Moneylife Digital Team 07 May 2022
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.
 
UPDATE
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.
Comments
rajmaniinvestments
2 months ago
There may be some involvements in dabba trading by all these as they were managing nifty ETF ??
rr_ram_2000
2 months ago
Already the identified rogue dealer is drawing a remuneration of around INR 1.2 crs. Still the greed persists. In the end, retail investors are the ultimate victims.
rr_ram_2000
2 months ago
This was a perfect storm waiting to happen. I had a nightmarish experience with this fund house last year. When I required funds very urgently, I redeemed units from few equity schemes online. However the redemption proceeds were not credited within the timeline specified as per AMFI rules. Latest after 2 weeks I got a SMS saying that there was a mismatch in the bank account. I had to follow up multiple number of times with the fund house to get it sorted. More importantly i had to borrow money at exhorbitant interest rate to meet the emergency commitment. End of the day, even though I had my own money available on tap, I had to run from pillar to post all because of this goof up. Still they make audacious statements "Mutual Fund Sahi Hai" what a shame!
Pradeep M
3 months ago
hello ML, should we withdraw from axis mutual fund . i have invested in few funds but not the one listed above.
mcshekhar2009
3 months ago
Why didn't Axis MF Management not inform Investors in Feb when they noticed malpracti se ? Why were these two Fund Managers allowed to trade till last week ? When is CEO being sacked ?
mcshekhar2009
Replied to mcshekhar2009 comment 3 months ago
Why didn't Axis MF Management inform...correction ?
RBS
3 months ago
Why ED does not take up this matter. They have far more authority than SEBI and other Stock Market related authorities. In fact, SEBI should invite ED and CBI for investigations in such matters if SEBI is serious in stopping such malpractices, which are apparently rampant in MF managers.
ED should just ask the managers to justify their source of income for the Lamborgini and everything will come out.
Kamal Garg
3 months ago
How can someone cook the dealing/punching price when there is supposed to be a multi-layer scrutiny and office peer-to-peer grapevine. Does it mean that even the senior/top management turned blind eye to all what has been happening. It is a shame on Axis MF.
mcshekhar2009
Replied to Kamal Garg comment 2 months ago
By all standards , CEO should have been sacked....that shameless guy is still hanging around
rr_ram_2000
Replied to mcshekhar2009 comment 2 months ago
Absolutely. These charcters earn crores of rupees as remuneration from the savers enticed by slogans like "Mutual Funds Sahi Hi" and then run the fund house without any authority or responsibility.
Nahom
Replied to Kamal Garg comment 3 months ago
Haftha ooper thak jaatha hai. CEOs of Axis MF. Axis Bank, Schroeder London and corrupt luminaries called trustees feasting on middle class money.
Nahom
3 months ago
How can one front run Nifty Etf ?
sanvidwans
Replied to Nahom comment 3 months ago
It's one of the schemes where Joshi was fund manager. Details of trades are not disclosed. It would be probably in case of Arbitrage fund and other Active equity funds
lakshmi_56
3 months ago
As if it is something new. This practice is rampant in the Mutual Fund Industry since time immemorial.

raaajan03
3 months ago
Absolutely shameful. Common man trust the MF for their expertise and if the people who are running and managing the funds are dishonest crooks what is the sanctity of Mutual Funds. Again nothing will happen to any of these crooks who will hire the best lawyers to thwart any action against them. What action is SEBI going to take against them and will the concerned people be arrested immediately?
rajmaniinvestments
Replied to raaajan03 comment 2 months ago
He may not be alone ?
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