The entity paid a total of Rs 6.29 to resolve alleged violations of the Mutual Fund Code, and accordingly Sebi confirmed that “the procedures that may be initiated for the violation will be resolved with regard to the applicant.”
A settlement was reached following applications filed by the entity that proposed to resolve the violation “allowing or denying the findings of facts and law and the conclusions of the law.”
The allegations focus on Axis AMC’s failure to properly monitor the dealer’s activities, allowing former dealer Viresh Joshi to engage before and after the transaction. Additionally, AMC was accused of lacking appropriate systems to ensure compliance in dealing rooms.
Access to the trading room was said to have not been revoked for certain employees, including employees from other departments, and there were cases of unauthorized access during market hours.
According to the order, the majority of Axis AMC’s active transactions were concentrated on Joshi, with dealers not present, and AMC had temporary arrangements with investment associates who could assign the role of an equity research analyst or alternative dealer. Nevertheless, it turns out that dealers are negotiating transactions with multiple brokers on behalf of mutual funds and connected entities. “AMC is therefore said to have not monitored the proper checks and balance in trading operations, which resulted in Axis mutual fund trading head-on,” the order said.
Additionally, AMC employees, including Gopani, received confidential information regarding Axis mutual fund transactions, and are said to have influenced the buying and selling of securities.
Additionally, Jhangiani was accused of using mobile phones during market hours, violating AMC’s defined code of conduct regarding communications during trading hours.
The violations were revealed after forensic examinations conducted by Alvarez & Marshal India, Deloitte Touche Tohmatsu India and BDO India LLP. The SEBI investigation also considered board comments from the AMC and the Trustees Committee, as well as a temporary former party order issued by SEBI in February 2023.
In relation to the front case, Sebi previously banned 21 entities, including Joshi, from participating in the securities market. These actions were part of the frontline axis mutual fund trading scheme between September 2021 and March 2022.
Nigam, former CEO of axis AMC, resigned from the company in March 2023, follows the emergence of SEBI orders on Front-Running.
