![](\"https:\/\/im.rediff.com\/money\/2021\/sep\/03investment-2.jpg?w=670&h=900\")
<\/p>\nThe Securities and Exchange Board of India (Sebi) could soon issue interim orders imposing a market ban on the two former fund managers of Axis Mutual Fund (MF) for suspected front-running of trades, said people with knowledge of the development.<\/p>\n
<\/p>\n
“The market regulator has gathered prima facie evidence that demonstrates that the duo has violated the integrity of the market.<\/p>\n
“While a detailed investigation is still pending in the matter, Sebi could take action under Section 11 (4) to prevent further harm to the investors and the securities market,” said a source.<\/p>\n
Sebi passes interim orders in rare instances, when it thinks action is needed to protect the integrity of the market.<\/p>\n
Over the past few weeks, Sebi has carried out extensive search and seizure operations across multiple cities to gather evidence on alleged front-running.<\/p>\n
The regulator has seized various records, documents, and digital evidence from phones, laptops, and hard drives used by 16 suspected entities.<\/p>\n
The regulator has also been receiving inputs from its internal surveillance alert systems and also from the National Stock Exchange (NSE) on suspected front-running of trades at Axis MF.<\/p>\n
E-mails sent to Sebi and Axis MF did not elicit any response.<\/p>\n
Last month, Axis MF asked fund managers Viresh Joshi and Deepak Agarwal to leave the organisation due to alleged irregularities.<\/p>\n
The regulator, through an interim order, plans to restrain the duo from buying, selling, or dealing in securities, either directly or indirectly. A source said the regulator is in the process of ascertaining illicit gains made by the two and other connected entities.<\/p>\n
This will enable it to impound the bank accounts of these entities to the extent of alleged ill-gotten gains.<\/p>\n
Before terminating the duo, Axis MF had suspended both Agarwal and Joshi pending a probe.<\/p>\n
The fund house had reassigned responsibilities to other fund managers for seven schemes.<\/p>\n
The fund house has also roped in two agencies to investigate the front-running case.<\/p>\n
The agencies have been tasked with identifying lapses, ascertaining if other individuals were involved in any way.<\/p>\n
Joshi has been associated with Axis AMC since 2009 and was the chief trader and fund manager. His core responsibilities included managing arbitrage fund and derivatives trading strategies.<\/p>\n
He used to oversee Axis Arbitrage Fund, Axis Technology ETF, and Axis Consumption ETF. Agarwal joined Axis AMC in 2015 as a research analyst.<\/p>\n
He was promoted to assistant fund manager for equity in 2020. From 2021, he managed the Axis Quant Fund and the Axis Consumption ETF.<\/p>\n