Covers 30 locations across multiple cities including Maharashtra and Gujarat.
The Securities and Exchange Board of India (Sebi) has conducted searches at multiple premises associated with 16 “suspected entities”, in connection with an ongoing probe in the front-running case at Axis Mutual Fund.
The search operations were carried out this week, covering over 30 locations in multiple cities, including those in Maharashtra and Gujarat, said a regulatory official. Those searched included executives at the fund house, stockbrokers, authorised persons of stockbrokers, and traders.
Front-running, which involves dealing in stocks based on insider knowledge of a future transaction, is considered one of the most serious offences by Sebi.
The market regulator widen the scope of the investigation following information it received on alleged irregularities at the fund house from its surveillance systems, along with inputs from the National Stock Exchange (NSE) over the past few weeks.
Sebi has initiated a full-fledged investigation into the suspected front-running of trades by certain entities, an official said.
The regulator’s investigation focuses on the modus operandi, involving fund managers and brokers, besides the quantum of the “ill-gotten” gains.
During the search operations, the regulator has seized various sets of digital and physical evidence, such as records and documents extracted from mobile phones, laptops, desktops, tablets, and hard drive disks found in the custody of these entities, it has been learnt.
The matter came under the regulatory lens after Axis Mutual Fund suspended its two fund managers, Deepak Agrawal and Viresh Joshi, on May 19, amid allegations of irregularities in managing their funds. Later both were sacked for alleged misconduct.
In response to this, Joshi has sent a legal notice to the fund house over wrongful termination. Meanwhile, Axis MF learnt to have appointed a second forensic auditor to conduct the audit.
According to sources, the two fund managers allegedly made illicit gains worth Rs 150 crore to Rs 200 crore through front-running.
Joshi has been associated with Axis AMC since 2009 and was its chief trader and fund manager. His core responsibilities included managing arbitrage funds & derivatives trading strategies. He used to oversee Axis Arbitrage Fund, Axis Technology ETF, and Axis Consumption ETF.
Agarwal joined Axis AMC in 2015 as a research analyst, equity. He was promoted to assistant fund manager (equity) in 2020. Since 2021, he has been managing the Axis Quant Fund and the Axis Consumption ETF.
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