Market regulator Securities and Exchange Board of India (SEBI) has taken major action against Viresh Joshi, former chief dealer of Axis Mutual Fund. SEBI banned Viresh Joshi from the securities market for 7 years.
According to SEBI, Joshi did the work of front-running by leaking confidential information related to the fund house’s trades to an external trader. Due to this he made illegal profit of Rs 30.56 crore. Let us tell you that this matter was investigated by SEBI during the period from 1 September 2021 to 31 March 2022.
How was the trading done?
According to SEBI, Joshi, who worked as the Chief Dealer in Axis Mutual Fund till May 2022, had information related to the trades of the fund which was not available to the general public. This included information such as the names of the stocks, their quantities and the time of the order. During investigation, it was revealed that he shared this information with Dubai-based trader Prijesh Kurani. Kurani placed trades through a network of ‘mule’ accounts even before the orders of Axis Mutual Fund hit the market. According to SEBI, these trades were made through the accounts of Qurani’s wife, mother, mother-in-law, brother, an FPI related to his family and many other people and institutions.
SEBI also admitted that Sumit Desai, Pranab Vora and Vaibhav Pandya helped further the scheme by introducing Joshi to Kurani and arranging the accounts through which trades were made.
According to SEBI, the total illegal earnings from the alleged scheme was calculated at Rs 30.55 crore. Of this, the largest share i.e. Rs 14.07 crore belonged to Visa Capital Partners. This amount was already seized under the interim order and show cause notice issued by SEBI on February 28, 2023.
What was Joshi’s reaction?
Joshi denied that he was the ‘magician’. He also denied that the name ‘Jadugar’ mentioned in the WhatsApp chat presented by SEBI was used for him. He denied the allegations throughout the proceedings. He argued that as a chief dealer, his job was only to execute the orders of the fund managers and he had no role in selecting stocks or changing orders.
He said that Axis Mutual Fund works under strict rules, hence the possibility of leakage of confidential information does not seem possible. Joshi challenged SEBI’s evidence. The former dealer also challenged the evidentiary basis of the case. Joshi claimed that he had lodged complaints against the members of the SEBI investigation team at Mulund police station.