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SEBI Bans Ex-Axis MF Dealer Viresh Joshi for 7 Years

By Business DeskSEBI Bans Ex-Axis MF Dealer Viresh Joshi for 7 Years

SEBI bans former Axis Mutual Fund dealer Viresh Joshi for 7 years and imposes a ₹3 crore penalty for front-running, impounding ₹30.55 crore in wrongful gains.

The Securities and Exchange Board of India (SEBI) has issued a final order in the Axis Mutual Fund front-running case, effectively barring Viresh Joshi, the former chief dealer, from the securities market for seven years. This decisive action also includes a significant penalty of ₹3 crore against Joshi.

SEBI’s investigation also extended to 20 other individuals implicated in the matter, imposing bans ranging from three to seven years. These penalties and debarments follow an interim order-cum-show-cause notice initially issued in February 2023.

Key Sanctions and Gains Impounded

  • Viresh Joshi: Barred for seven years, fined ₹3 crore.
  • Other Individuals: 20 people banned for three to seven years, with penalties from ₹10 lakh to ₹1 crore.
  • Wrongful Gains: Approximately ₹30.55 crore generated between September 1, 2021, and March 31, 2022.

These wrongful gains, impounded after the initial interim order, will now be treated as disgorgement. They are earmarked for transfer to the Investor Protection and Education Fund (IPEF), reinforcing SEBI’s commitment to investor welfare.

Unpacking the Front-Running Mechanism

The investigation meticulously detailed how Joshi allegedly exploited his position to facilitate the front-running scheme. He was found to have shared non-public information regarding Axis Mutual Fund’s impending trades with external players.

  • These connected individuals then executed front-running trades from Dubai.
  • They utilized ODIN terminals, provided by Marfatia Stock Broking and Woodstock Broking.
  • Offshore entities were created to deposit the illicit gains, further obscuring the trail.
  • Evidence, including WhatsApp chats with coded identities, supported the findings of coordinated communication.

SEBI emphasized that such conduct directly undermines the integrity of mutual fund management and compromises investor interests. The regulator also confirmed that any debarment period already served since the interim order will be adjusted against the new restraint directions in the final order.

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