Axis MF suspends two fund managers amid allegations of irregularities

Axis Mutual Fund (MF), the country’s seventh-largest fund house, has suspended two fund managers, Viresh Joshi and Deepak Agarwal, amid allegations of irregularities in managing their funds. The fund house has reassigned their responsibilities to other fund managers in seven schemes, which have combined assets under management of over Rs 7,700 crore.

Meanwhile, the Securities and Exchange Board of India (Sebi) has initiated a preliminary enquiry in the fund’s investment activity for the last two years.

“We are examining certain aspects as the initial probe is indicating some kind of nexus between the fund managers and dealers in front-running of stocks,” a regulatory source privy to the development told Business Standard.

In a statement, Axis Bank said a suo moto investigation was launched two months ago to probe potential irregularities.

“Axis MF has been conducting a suo moto investigation over the last two months (since February 2022). The AMC has 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/regulatory requirements seriously, and have zero tolerance towards any instance of non-compliance,” said Axis Bank, which is the sponsor of the fund house.

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.

“We are looking at certain complaints against some of the fund managers, who have allegedly made illicit gains in the range of Rs 150 to Rs 200 crore,” said another source, adding that the independent audit in this regard would be the key in establishing the quantum of gains made wrongfully.

Sebi is also examining the breach of code of conduct and will question more staffers of Axis MF in the coming weeks, said another person.

Axis MF’s average AUM jumped 32 per cent to Rs 2.24 trillion for the quarter ended March 2022. This was the highest growth among the top 10 players and higher than the industry average growth of 20 per cent.

Viresh Joshi has been associated with Axis AMC since 2009 and was the chief trader and fund manager. His core responsibilities included managing arbitrage fund & derivatives trading strategies. He used to oversee Axis Arbitrage Fund, Axis Technology ETF, and Axis Consumption ETF.

Deepak 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.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor