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Sebi penalizes Axis MF-linked front-running scheme, bans former dealer
The regulator said it found confidential details of Axis Mutual Fund trades were passed to a Dubai-based trader and acted on through multiple accounts between September 2021 and March 2022.
The Securities and Exchange Board of India (Sebi) has imposed penalties totaling ₹7.4 crores and market bans on former Axis Mutual Fund chief dealer Viresh Joshi and others after concluding they were involved in a front-running scheme tied to confidential information about the fund house's upcoming trades, according to LiveMint Markets.
Sebi said its surveillance system flagged suspicious trading patterns in trades conducted between September 2021 and March 2022, and that front-running involved using non-public information to trade ahead of large orders so profits could be booked after the fund’s trades hit the market.
The regulator alleged Joshi, due to his role as chief dealer, had access to details including the stock, quantity and timing of Axis Mutual Fund’s proposed trades, which he then shared with Dubai-based trader Prijesh Kurani.
Sebi also said Sumit Desai, Pranav Vora and Vaibhav Pandya helped the scheme by arranging trading accounts used to execute the trades and introducing Joshi to Kurani, and that Kurani placed orders shortly before Axis Mutual Fund’s orders reached the market, using multiple accounts belonging to relatives and other entities.
Sebi said it pieced together the alleged conduct using statements from the probe, a whistleblower complaint, analysis of call detail records, WhatsApp chats and other digital evidence, which it said showed communication that supported how the confidential information was allegedly passed and acted upon.