SEBI Bans Former Axis MF Dealer Viresh Joshi from Securities Markets for Seven Years in Front-Running Case
Key Takeaways
- •SEBI barred Viresh Joshi and Prijesh Kurani from participating in securities markets for seven years due to their involvement in front-running Axis Mutual Fund trades.
- •Approximately Rs 30.56 crore in previously impounded funds was directed by SEBI to be treated as disgorgement of wrongful gains.
- •Joshi allegedly disclosed non-public information about Axis Mutual Fund's pending trades to Kurani, who used it to execute profitable trades ahead of the fund's own orders.
- •Axis Mutual Fund initiated an internal investigation in 2022, terminated Joshi's employment, and cooperated with SEBI's regulatory probe.
- •The enforcement action has prompted wider scrutiny of information-sharing protocols and internal controls across Indian asset management companies.
India's securities regulator, the Securities and Exchange Board of India (SEBI), has barred Viresh Joshi, a former dealer at Axis Mutual Fund, and Prijesh Kurani from participating in the securities markets for a period of seven years. The ban stems from a front-running case involving Axis Mutual Fund trades.
In addition to the market access prohibition, SEBI directed that approximately Rs 30.56 crore in previously impounded funds be treated as disgorgement. Disgorgement is a regulatory remedy intended to strip wrongdoers of ill-gotten gains.
According to SEBI, Joshi allegedly shared non-public, material information about Axis Mutual Fund's pending trades with Kurani, who then used that information to execute illicit trades ahead of the fund's own orders. This practice, known as front-running, allows a trader to profit from advance knowledge of large institutional transactions that are likely to move market prices. The case is among the more high-profile front-running enforcement actions in India's mutual fund industry, an area where SEBI has been strengthening its market surveillance and data analytics capabilities to detect abusive trading patterns.
The regulator found that the scheme involved multiple individuals and entities that facilitated the wrongful gains. Front-running is prohibited under SEBI regulations because it undermines market integrity and disadvantages other market participants who do not have access to the same non-public information. In the context of mutual funds, which manage pooled retail savings, the practice is particularly damaging because it can erode returns for ordinary investors whose money is being traded.
The case dates back to allegations that first surfaced in 2022, when Axis Mutual Fund launched an internal investigation into suspected front-running activity by one of its dealers. The fund house subsequently terminated Joshi's employment and cooperated with the regulatory probe. The episode prompted scrutiny of internal controls and information-sharing protocols at Indian asset management companies.
Source: Economic Times Markets
