Sacked fund managers violated securities law; their conduct will have no impact on operations: Axis AMC

Axis Asset Management Company, which had sacked its two fund managers in May, on Tuesday said a detailed probe has found that they had violated securities law but emphasised that their conduct would not have any impact on its operations.

The mutual fund promoted by

terminated the services of its chief trader and fund manager Viresh Joshi on May 18, and fund manager Deepak Agrawal on May 20. It was alleged that the two individuals made illicit gains through front-running activities.

Axis AMC started a suo-moto investigation through external advisors in February and the findings till date have been shared with the capital markets regulator Sebi, the company said in a statement.

In May, Axis AMC at that time did not elaborate on the violations that led to the sacking of the two fund managers.

In the statement on Tuesday, Axis AMC said that after a “detailed and thorough” investigation, it has reasons to believe that both fund managers have violated securities law.

“Joshi committed clear breaches of our policies, including non-cooperation with our internal investigation (during his suspension period). We also have strong reasons to believe that there have been breaches of securities law by him,” the company said.

About Agarwal, Axis AMC said it also has reasons to believe that he may have violated securities law.

“Based on the findings so far, we believe that the conduct of the 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 company said.

Further, it said the entire fund management and top management team of the fund house remain intact and strongly focused on delivering value to investors.

“We have 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 paramount to us,” it added.

In late May, Axis AMC said it was cooperating with regulatory authorities amid reports of Sebi carrying out ‘search and seizure’ at several entities in connection with an ongoing probe into alleged wrongdoings by two former fund managers of the fund house.

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

Front-running refers to an illegal practice in the stock market where an entity trades based on advance information from a broker or analyst before the information has been made available to their clients.


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