The Economic Times on Sunday reported that the income tax department conducted raids in various locations connected to Viresh Joshi, a former chief trader at Axis Mutual Fund.
Viresh Joshi who was working in Axis Mutual Fund as Chief Trader and fund manager was sacked in May 2022 over the allegation that he along with his colleague was involved in front running.
Front running is an illegal act in which a person, who knows sensitive information about a company beforehand, uses that information to make a profit out of trading in Capital markets. Profit or gain can be directly or indirectly by helping someone else with information.
Raids conducted by the Income Tax department are connected to another allegation that Viresh Joshi allegedly evaded tax. Several news reports confirmed that the latest action by the IT department on this case was after the Securities and Exchange Board of India shared the necessary information for tax evasion with the IT department.
The Securities and Exchange Board of India (or SEBI) is a regulator of security laws and capital markets in India.
Various sources told the Economic Times that SEBI is suspicious regarding certain transactions conducted by Viresh Joshi and related people. These transactions hint at the fact that allegations of front running are true and that the accused made huge amounts of money through the illegal act.
The big difference between the average income of Viresh Joshi and his assets strengthens the suspicions bout Viresh Joshi. The sources added that SEBI has found out possibilities of Viresh Joshi having siphoned off funds to other countries and evading tax on a huge amount.
That led to SEBI sharing the information with the IT department, which resulted in the latest raids.
Viresh Joshi and Front RunningÂ
Axis Mutual Fund which is based in the financial capital of India, Mumbai is owned by Axis Bank and British asset management company Schroders PLC. With more than 1.28 crore active investors in various schemes, and a presence in more than 100 cities, Axis Mutual Fund is one of the largest mutual fund companies in India.
Earlier this year, several traders informed the top management of mutual funds regarding irregular absences and suspicious activities of Viresh Joshi, who has been with the company since its inception.
Later, Axis Mutual Fund hired a team of private investigators to investigate ion the allegations regarding front running. Soon after the investigation was finished, the mutual fund in May fired Viresh Joshi and another colleague of his from all posts in the company. The reason for the action was that the company through investigations found enough evidence to suggest Viresh Joshi did take part in front running.
Reluctant behaviour from Mr Joshi to participate actively in the investigation was also a supporting reason for the mutual fund to take such drastic action.