Axis MF front-running case: ED conducts searches in Mumbai, Kolkata

The Enforcement Directorate (ED) has seized properties and foreign currencies worth almost Rs 13 lakh in connection with the front-running investigation at Axis Mutual Fund. The seizures were made during searches conducted on September 9 at various locations in Mumbai and Kolkata under the Foreign Exchange Management Act (Fema). The ED found and seized movable properties, including foreign currencies (GBP/Euro/AED), incriminating documents related to overseas immovable properties and bank accounts, and digital devices.

The investigation stems from a Securities and Exchange Board of India (Sebi) order in 2023, which barred former Axis MF fund manager Viresh Joshi and 20 other entities from the securities market for alleged front-running trades. Sebi had ordered disgorgement of Rs 30.55 crore in the matter. The ED probe is ongoing, while Joshi has moved the Securities Appellate Tribunal (SAT) for relief.

Front-running involves using confidential information on institutional trades to make investment decisions, potentially impacting stock prices. To prevent this, individuals with access to such information are restricted from front-running. Following several cases of malpractices like front-running and insider trading, Sebi has strengthened governance norms and monitoring of mutual fund officials, introducing an institutional mechanism for surveillance and monitoring.

Recently, Sebi introduced an institutional mechanism for surveillance and monitoring for mutual funds, putting a greater onus on top officials to prevent front-running.