Sebi Slams Front-Running: Former Axis MF Dealer Fined ₹7.5 Crore for Orchestrating Market Abuse
Regulators Penalize Chief Dealer in Major Axis Mutual Fund Scandal
The Securities and Exchange Board of India (Sebi) has leveled significant penalties against former Axis Mutual Fund chief dealer Viresh Joshi and 20 associates following the discovery of a large-scale front-running scheme. The regulatory action targets practices that generated illegal gains by trading ahead of official fund house orders.Sebi concluded that Mr. Joshi misused confidential information concerning impending fund trades spanning from September 2021 to March 2022. This sophisticated misuse involved passing the proprietary information to Dubai-based trader Prijesh Kurani, who then executed manipulative trades via a network of conduit accounts.
Scale and Severity of Market Abuse Uncovered by SEBI
The regulatory investigation uncovered that the illegal gains made through this front-running scheme are substantially higher compared to comparable cases. The scandal involved a significant portion of Axis Mutual Fund's investor base at the time, which stood at approximately 1.28 crore accounts as of March 31, 2022.Sebi noted that the scope of the market abuse, coupled with the large number of investor accounts, underscores the severity of the misconduct. The misuse was not limited to passive conduit roles for all participants.
Joshi Accused of Orchestrating Front-Running Scheme
The regulator's 146-page order detailed how Mr. Viresh Joshi was not merely a receiver of information but the architect of the scheme. He conceived and orchestrated the entire operation, identifying and coordinating with the executioner, Prijesh Kurani.Joshi also directed the trading activity, facilitating the routing of wrongful gains through a Dubai-based company. This entity appears to have been specifically incorporated to further the illicit scheme and obscure the trail of illegal proceeds.
Penalties Imposed: Fines and Market Ban Issued by Sebi
In response to the deliberate market manipulation, Sebi imposed penalties totaling ₹7.5 crore on Viresh Joshi and 20 other individuals involved in the scandal. Both Mr. Joshi and Prijesh Kurani have also been banned from participating in the securities market for a period of seven years.Sebi's investigation revealed that by his own admission, Mr. Viresh Joshi generated a conservative estimate profit of approximately ₹18.33 crore through this illegal front-running operation. The regulator found that Prijesh Kurani utilized multiple trading accounts belonging to associates and relatives to place orders moments before Axis Mutual Fund's substantial buy or sell orders entered the market.
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