Mumbai, July 24 — The Securities and Exchange Board of India (SEBI) on Friday barred Viresh Joshi, former chief dealer of Axis Mutual Fund (MF), from the securities market for seven years and imposed a penalty of Rs 3 crore after finding him guilty of front-running trades involving the fund house.
In its final order, the market regulator also debarred 20 other entities linked to the case for periods ranging from three to seven years and imposed monetary penalties between Rs 10 lakh and Rs 1 crore.
SEBI had issued an interim order-cum-show cause notice in February 2023 after uncovering an alleged front-running network that operated between September 1, 2021 and March 31, 2022.
At the time, the regulator estimated the total unlawful gains from the scheme at around Rs 30.55 crore and ordered the amount to be impounded.
According to the final order, the period of debarment already undergone by the accused since the interim order will be adjusted against the fresh restraint directions.
The regulator found that Joshi misused his position as chief dealer by sharing confidential, unpublished information relating to Axis Mutual Fund's impending trades with certain external associates.
These individuals allegedly executed front-running trades from Dubai and routed the illicit gains through offshore entities.
SEBI said orders were placed from Dubai using Open Dealer Integrated Network (ODIN) terminals provided by Marfatia Stock Broking and Woodstock Broking after receiving advance information about the mutual fund's proposed transactions.
The investigation also revealed the use of multiple mule accounts to execute the trades.
Evidence collected during the probe, including WhatsApp conversations, pointed to coordinated communication among the accused, who allegedly used coded identities such as "jadugar" and "asdfg" to conceal their activities.
The regulator further observed that several of the individuals involved in the case had also been linked to market manipulation in other securities unrelated to Joshi.
"Mutual funds are managed for the benefit of the unit holders. Any conduct that exploits confidential information regarding the implementation of schemes undermines that arrangement, as it places private gain ahead of the fund execution quality and interest of the investors," SEBI said in its final order.