Axis AMC confirms suspension of 2 fund managers for 'potential irregularities'

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Axis AMC on 6 May said it has suspended two fund managers pending investigation of potential irregularities, as per an official statement.

The company said it has been conducting a suo moto investigation over the last two months, since February, and used reputed external advisors to aid the investigation.

On May6, Moneycontrol reported that two fund managers at the asset management company have been put on leave on allegations of front-running the mutual fund's trades on their personal accounts. Chief trader and fund manager Viresh Joshi, assistant fund manager Deepak Agarwal are the two Axis mutual fund officials that have now been suspended, pending investigation, the fund house's officials statement confirms.

Moneycontrol was first to report the allegations of wrongdoing by a dealer at a large fund house in its MC Insider. Read: Lamborghini trail here. According to that report, there had been whispers of an audit by the market regulator into front-running cases within a top-tier asset management company. The main accused, the dealer, was said to have been painting the town red in a Lamborghini.

Front running is a corrupt stock market practice that involves a market participant – usually a dealer or a broker – entering the equity market minutes before a large institutional investor (typically a mutual fund) transacts in the same set of scrips that the institution trades in. The aim is to make profits with the information available, of what the institution would buy or sell. When large institutions buy or sell shares, price movements are generally substantial, given the large quantity of stocks involved.

(This is a developing story. Please check back for updates)