- SEBI levied fines totalling Rs 7.5 crore on 21 entities, including Axis Mutual Fund’s former fund manager Viresh Joshi, and barred them from the securities markets for up to seven years in a case related to front-running allegations.
- Viresh Joshi was penalized Rs 3 crore and Prijesh Kurani Rs 1 crore, both prohibited for seven years. 19 other entities were fined between Rs 5-65 lakh and similarly restrained for up to seven years.
- The front-running period was September 2021 to March 2022, where entities connected to Joshi (then chief dealer of Axis MF) traded ahead of Axis MF orders and squared off positions after the orders were placed.
- SEBI concluded that Viresh, Sumit Desai, Pranav Vora, Vaibhav, and the Kurani Group, Marfatia Group, and Jajoo Group colluded to execute a scheme to front-run the orders of the Big Client (Axis MF).
- The order described the scheme as well thought-out, using inter-se connections, consistent patterns of pre-positioning and squaring off, mule accounts, offshore structures, and coded identities to evade early detection.
- Viresh Joshi was not a passive conduit; he conceived and orchestrated the scheme, coordinated with executioner Prijesh Kurani, directed trading, and routed wrongful gains through a Dubai-based company to obscure the trail.
- An additional Rs 30.56 crore impounded per an interim order dated February 28, 2023 shall be treated as the disgorgement amount, with 12% annual interest directed by the regulator.
SEBI's investigation revealed a coordinated scheme involving Viresh Joshi and 20 other entities who manipulated trades for a major client, Axis Mutual Fund, from September 2021 to March 2022.1234568
Joshi was found to have orchestrated the scheme, directing trading activities and facilitating illicit gains through offshore structures.7
The regulator imposed a ₹3 crore fine on Joshi and a ₹1 crore fine on Prijesh Kurani, with penalties for 19 other entities ranging from ₹5 to ₹65 lakh.
SEBI's final order stated that the ₹30.56 crore impounded will be treated as disgorgement, with a 12% annual interest mandated on this amount.910
The scheme involved pre-positioning trades and squaring off positions immediately after the Big Client's orders were placed, indicating a well-planned operation to evade detection.
SEBI's Quasi-Judicial Authority noted that the connections among the noticees and their consistent trading patterns demonstrated a deliberate effort to manipulate the market.
The actions of Joshi and his associates have raised serious concerns about market integrity and investor trust.
“SEBI described the scheme as 'well thought-out,' using mule accounts and coded identities, and impounded ₹30.56 crore as disgorgement with 12% annual interest. The front-running, which ran from September 2021 to March 2022, was orchestrated by Joshi who routed gains through a Dubai-based company to obscure the trail.”
Daily Pioneer
