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    Axis MF front-running scam: AMC says probe done, report with SEBI

    Axis MF front-running scam: AMC says probe done, report with SEBI

    Axis MF front-running scam: AMC says probe done, report with SEBI
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    By CNBC-TV18  IST (Published)

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    The fund house, which manages assets of over Rs 2.59 lakh crore, said it has strong reason to believe that the two terminated fund managers, Viresh Joshi and Deepak Agrawal, may have breached the securities law.

    The fund house, which manages assets of over Rs 2.59 lakh crore, said it has strong reason to believe that the two terminated fund managers, Viresh Joshi and Deepak Agrawal, may have breached the securities law.

    Axis Asset Management Company, the mutual fund promoted by Axis Bank, on July 5 said it has completed the probe on two terminated fund managers and has submitted the report to the Securities and Exchange Board of India (SEBI).

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    The fund house said that based on available evidence, it has strong reasons to believe that Viresh Joshi and Deepak Agrawal may have breached securities law.

    Axis AMC has been conducting a suo moto investigation since February 2022, with assistance from reputed external advisors.

    Further, it said that Joshi has committed clear breaches of its policies, including non-cooperation with the internal investigation (during his suspension period).

    "Based on the findings so far, we believe that the conduct of concerned individuals identified do not have any impact on our liquidity or our operations. Any misconduct by the individuals concerned was outside of and in contravention of our policies and procedures and the training they had received," the Axis AMC said.

    Also, the fund house said it has followed the required regulatory and compliance guidelines at all points in time and will continue to do so. "As a fund house, we will always continue to work in the interest of our investors/stakeholders, whose trust is of paramount importance to us," it said.

    "The entire fund management (other than the 2 individuals referred above) and top management team of the fund house remain intact and strongly focused on delivering value to our investors," a statement from the fund house said.

    "With an impeccable reputation and track record for over a decade, strong backing of our principal shareholder Axis Bank and support from our other JV partner Schroders, we remain committed to each one of our stakeholders (including investors and distributor partners) and thank them for keeping their faith in us," it added.

    Earlier, the mutual fund had terminated its chief trader and fund manager Viresh Joshi on May 18, and fund manager Deepak Agrawal on May 20, who were facing allegations of front-running.

    It was alleged that the two fund managers allegedly made illicit gains through front-running. However, the Axis AMC did not elaborate on the violations that led to the two fund managers' sacking.

    Front-running, which is illegal in India, involves purchasing a stock based on advance exclusive information regarding an expected large transaction that would affect its price. SEBI has categorised front-running as a form of market manipulation and insider trading, and penalised several fund houses and fund managers in the past over this activity.

    Axis AMC, which is one of the leading mutual funds in the country with assets under management of Rs 2.59 lakh crore is facing allegations of front-running and a reported regulatory probe.

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