After reports of alleged wrongdoings and front running, Axis AMC (Asset Management Company) has confirmed that it has suspended two fund managers. The company said it has "zero tolerance" towards any "non-compliance", adding that reputed external advisers are helping it carry out the investigation against these "potential irregularities".
"Axis AMC has been conducting a suo moto investigation over the last two months (since February 2022). The AMC has used reputed external advisers 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," says the company clarification.
It also requested media "no to give credence to market speculation and idle gossip, which are baseless and we strongly refute the same".
The two fund managers who have been suspended are believed to be Viresh Joshi and Deepak Agrawal, though the company has not named them in its statement. Axis Mutual Fund had announced a change in fund managers of its seven schemes, with effect from May 4. The names of these two fund managers were missing from the revised list.
Joshi, who was the head trader for Axis Mutual Fund, and Deepak Agrawal, who was an equity research analyst and fund manager for Axis Consumption ETF, are no longer a part of these mutual fund schemes. It has been alleged that they indulged ‘front running’, a practice that's prohibited and in which a broker exploits market-moving knowledge not available to the public.
Joshi was earlier one of the heads of Axis Arbitrage Fund, Axis Banking ETF, Axis Consumption ETF, Axis Nifty ETF, and Axis Technology ETF. In Axis Arbitrage Fund, Ashish Naik will replace Joshi, while Naik will alone handle Axis Nifty ETF. Axis Technology ETF, which was jointly headed by Joshi and Jinesh Gopani, will be handled by the latter only.
Deepak Agrawal, who was earlier part of Axis Value Fund, Axis Quant Fund, and Axis Consumption ETF, will no longer be part of these schemes. Instead, these schemes will be handled by Jinesh Gopani (Axis Value Fund) and Ashish Naik.
The action reportedly came after complaints by some brokers against one of the dealers. The dealer allegedly received kickbacks from brokers for executing trades way higher than the market. The dealer is also accused of a flashy lifestyle, including owning sports luxury cars and several real-estate properties, though no official statement has been issued so far. The fund manager, too, is accused of overlooking these wrongdoings.
Meanwhile, market experts think there's no reason for panic among investors as all these funds are managed by more than one manager. They also call for the fund house to come up with an official statement.
