Fresh scandal rocks mutual funds sector, two Axis fund managers suspended

MUMBAI:  In yet another shocker to mutual fund investors, who are yet to recover fully from the alleged irregularities by Franklin Templeton’s top executives, Axis Mutual Fund on Friday suspended two fund managers for serious violations. 

According to sources, the two fund managers — Viresh Joshi and Deepak Agarwal — made wrongful gains through ‘front running’. The jargon means trading stock or any other financial asset by a broker, who has inside knowledge of a future transaction that could affect price substantially. It is done by placing higher bids than current market price for a share and a lower ask (sell order) with a broker. The broker, then, passes on the difference to the managers off the books, in cash or in kind. 

Mutual fund insiders say the flamboyant lifestyle of one of the fund managers, who drives a limited-edition Lamborghini and owns several houses in Mumbai, caught the attention of the fund house, which began investigating the matter.

Axis MF, India’s seventh largest mutual fund by assets, said it has been conducting a suo motu investigation since February 2022. “The AMC has used reputed external advisors to aid the investigation. As part of the process, two fund managers have been suspended pending investigation of potential irregularities,” its statement read. It, however, dismissed rumours that its MD and CEO Chandresh Nigam was also involved in the irregularities. 

Markets regulator Sebi is also said to be probing the matter but it couldn’t  be confirmed immediately. 
According to a May 4 notice by Axis Mutual Fund, Joshi and Agarwal have been dropped as fund managers of four ETF schemes (Axis Consumption, Axis Banking, Axis Nifty, and Axis Technology) and three funds (Axis Arbitrage Fund, Axis Quant Fund and Axis Value Fund).