Mutual Fund News : SEBI Passes Interim Order to Ban 21 Entities in Axis MF Front-Running Case

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The capital markets regulator SEBI on Tuesday February 28, 2023 barred 21 entities from the securities market in connection with the Axis Mutual Fund front-running case. It also includes the Axis Mutual Fund’s former fund manager Viresh Joshi. An unlawful stock market practise known as ‘front-running’ occurs when a company makes trades based on information received in advance from a broker or analyst before the information is made available to its clients.

Earlier, On May 06, 2022, Axis Mutual Fund announced that it has suspended two of its fund managers due to potential irregularities. The two officials suspended were Viresh Joshi, Chief Trader & Fund Manager - Equity, and Deepak Agrawal, Assistant Fund Manager – Equity. Further, the matter was governed by the mutual fund regulator, a probe was initiated and SEBI interrogated other officials at Axis Mutual Fund on the same.

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According to SEBI’s recent interim order against the Axis Mutual Fund front-running case, the surveillance system in SEBI generated certain alerts indicating that trades by certain suspected entities executed during the period between September 01, 2021 to March 31, 2022 appeared to have been not executed in the normal course of trading and were apparently in the nature of trades that were executed for front-running the trades of Axis Mutual Fund (hereinafter referred to as ‘Axis MF’ / ‘Big Client’).

Viresh Joshi, the former chief dealer of Axis Mutual Fund, had the discretion to decide as to when the orders of Axis MF would be placed. The market regulator discovered throughout the investigation that entities associated with Joshi had been seen conducting front-running trades in a variety of securities from their trading accounts ahead of pending orders submitted on behalf of the Big Client. Also, these entities squared off their earlier trade positions taken on the exchange platform shortly after the Big Client's orders were placed, and profits were created in their trading accounts. The regulator also recognised impounding wrongful gains worth Rs 30.56 crore, earned by them through ‘Prima Facie’ front-running activities.

The regulator said Joshi had incorporated a corporation in Dubai apparently for engaging in such fraudulent acts including transferring the wrongful gains using 'clandestine channels'. The regulator demonstrated the front-running in at least three stocks including those of a manufacturing company, a consumer products company, and a new-age IT company.

As a result, SEBI prohibited 21 entities from engaging in any buying, selling, or dealing with the securities market, either directly or indirectly, until further instructions.

Sr. no. List of Entities Barred by SEBI
1 Viresh Joshi
2 Sumit Desai
3 Pranav Vora
4 Vaibhav Pandya
5 Prijesh Kurani
6 Dharini Kurani
7 Rekha Kurani
8 Bharti Navnit Godaya
9 M K B Bespoke Audio General
10 Bindesh Kurani
11 Nishil Surendra Marfatia
12 Olga Trading Pvt. Ltd.
13 Krunal Khamar
14 Kamlesh Arjundas Dhanrajani
15 Bhavin Shah
16 Rupal Bhavin Shah
17 Visa Capital Partners
18 Suresh K Jajoo
19 Vimal S Jajoo
20 Ankit Jajoo
21 Sheepra Sumeet Kabra


SEBI concluded that Viresh Joshi in collusion with other unscrupulous entities to front run the trades of his very own mutual fund where approx. 66 lakh unit holders have put an aggregate sum of AUM of Rs 2.52 lakh crore (as on March 31, 2022), it smacks of rampant dishonesty and unfairness on the part of Viresh Joshi and his accomplices.

At a time, when SEBI is extensively engaged in investor education and is taking series of steps to win investors' faith in the securities market. Such indulgence in heinous acts of market manipulation and fraudulent trade practices which have been blatantly displayed by a senior official of a one of the largest mutual fund houses in India has caused serious breach of trust reposed by the investors/unit holders of Axis Mutual Fund and can potentially cause further erosion of the trust in mutual funds as a medium of investment in securities market.