Front-running scandal rocks a $31 billion Indian investing giant Nupur Acharya, Bloomberg Jul 13, 2022, https://economictimes.indiatimes.com/markets/stocks/news/front-running-scandal-rocks-a-31-billion-indian-investing-giant/articleshow/92842495.cms
Front running is the trading of stocks by someone privy to information about a large impending transaction that will move prices. It’s illegal in India, and massive search and seizure operations were conducted by the market regulator at the offices and residences of Axis Mutual Fund executives, and other stock brokers and traders,
In early May, Axis Mutual Fund said it had put Viresh Joshi and another fund manager, Deepak Agrawal, under suspension pending an internal probe into potential irregularities. Soon after, people familiar with the matter told Bloomberg that SEBI was investigating whether the two men were involved in front running.
“We believe that our client is being scapegoated and his termination is wrongful and unlawful and that principles of natural justice were denied to him,” Chirag Shah, of-counsel at the law firm representing Joshi, said via email. The law firm also said that the asset manager didn’t take any action on several complaints filed by Joshi when he witnessed price spikes before he was able to execute orders given to him.
Meanwhile, the new head of SEBI in India, Madhabi Puri Buch, has attempted to crack down on market irregularities as equity mutual funds have lured billions of dollars in inflows.
In late May, the market regulator sent a circular to brokerages and fund houses, withdrawing the flexibility to work from home for employees handling critical functions linked to investments, compliance and risk management, brokers who have seen the circular but are not allowed to be quoted, said. SEBI didn’t respond to an email seeking comment.