Sebi fines Axis MF former dealer for front-running

The Securities and Exchange Board of India (Sebi) on Friday imposed penalties totalling ₹7.5 crore on former Axis Mutual Fund chief dealer Viresh Joshi and 20 others after concluding that they carried out a front-running scheme that generated illegal gains by trading ahead of the fund house's orders.

The regulator found that Joshi, who served as Axis Mutual Fund's chief dealer, misused confidential information on impending fund trades between September 2021 and March 2022 by passing it to Dubai-based trader Prijesh Kurani, who executed trades through a network of conduit accounts.

Both Joshi and Kurani have also been barred from the securities market for seven years.


"In the present matter, however, the conduct of Mr Viresh...the information carrier is even more serious. The illegal gains made through the front running is substantially higher than those seen in comparable cases. Further, the Big Client (Axis Mutual Fund) as at March 31, 2022 had approximately 1.28 crore investor accounts. The illegal gains involved, along with the large investor base, reflects the scale of the market abuse," the order said.

"Mr Viresh was not merely a passive conduit of information, the material on record shows that he conceived and orchestrated the scheme, identified and coordinated with the executioner (Mr Prijesh), directed the trading activity, and facilitated routing of wrongful gains through a Dubai based company that appears to have been incorporated to further the scheme and obscure the trail of illicit proceeds," Sebi officer Biju S said in his 146-page order. "By his own admission, Mr Viresh has, on conservative basis, made a profit of approximately ₹18.33 crore through the present illegal front running scheme," Sebi said. The regulator said Kurani used multiple trading accounts belonging to relatives, associates and other entities to place orders moments before Axis Mutual Fund's large buy or sell orders hit the market.