Axis MF replaces 2 fund managers amid front-running allegations

The fund managers have been accused of punching in trades on behalf of the fund at values much higher than the market. The complaint against them claims that the fund managers received kickbacks for doing so.

Amid allegations of front running and a probe into the matter by market regulator Securities and Exchange Board of India, Axis Mutual Fund has sent two fund managers on indefinite leave.

Financial daily The Economic Times named Fund Manager Viresh Joshi and assistant fund manager Deepak Agarwal as being removed from the management team of the funds in question.

Axis Mutual Fund, the seventh-largest mutual fund in the country, with Rs 2.59 lakh crore of assets under management, reportedly received complaints from brokers about dealers or fund managers punching in trades on behalf of the fund at values much higher than the market. The complaint further said that the fund managers received kickbacks for doing so.

There is speculation that CEO Chandresh Nigam may also be in the firing line for allegedly overlooking these practices. Nevertheless, as the buzz surrounding the malpractices spreads, market holdings of the mutual fund are expected to come under considerable stress

What is front-running?

Front-running refers to a practice wherein a broker uses inside knowledge of a future transaction to trade in stocks or any other financial asset. The person indulging in front running exploits information that is yet to be made public. Front-running is an illegal and unethical practice.

SEBI is believed to be looking into the allegations. Axis MF is yet to officially respond to queries.

To note, Axis MF had on Thursday announced new fund managers for seven of its funds which were earlier handled by VireshJoshi and Deepak Agrawal. The funds include Axis Arbitrage Fund, Axis Banking ETF, Axis Consumption ETF, Axis Nifty ETF, Axis Quant Fund, Axis Technology ETF and Axis Value Fund.

This is a developing story