Axis AMC, five others settle frontrunning-related case with Sebi

Axis Asset Management Company (AMC), Axis Mutual Fund (MF) Trustee and four former officials of the AMC have settled a case with the Securities and Exchange Board of India (Sebi) related to the 2022 front-running incident.

 

Chandresh Kumar Nigam, Darshan Kapadia, Jinesh Gopani, Pawan Jhangiani and the two institutions have jointly paid ₹6.3 crore to settle the matter pertaining to alleged lapses in maintaining dealing room confidentiality.

 

According to Sebi's settlement regulations, cases can be settled without admitting or denying the allegations.

 

While Nigam was the chief executive officer (CEO) of the AMC when the front-running incident took place, Gopani was the head of Equity and Kapadia was the compliance officer. Jhangiani was a dealer with the AMC.

 

The alleged violations include unauthorised access into the dealing room during market hours and failure to monitor the communication of dealers and fund managers during that time through the recorded modes.

 

These were among the findings of forensic audits after the front-running incident came to fore.

 

According to the Sebi investigation, the AMC had allegedly failed to “monitor the activities of the dealers resulting in front running of Axis MF trade by Viresh Joshi”.

 

Joshi, former dealer with the AMC, is the key accused in the front-running case and is facing multiple investigations.

 

AMC employees were also found to be “providing stock tips, divulging specific information about the scrips, details of the schemes of Axis Mutual Fund in which they took and/or squared off position”.

 

At the individual level, Gopani was also alleged to have passed on information to buy and sell securities which were being bought or sold by Axis MF.

 

Jhangiani, being a dealer at the AMC, had allegedly used his mobile phone during market hours, Sebi said.