NEW DELHI :
Viresh Joshi, the former fund manager of Axis Mutual Fund who is under investigations on charges of alleged front running, has sent a legal notice to the fund house alleging wrongful termination, said two people with direct knowledge of the matter.
“Joshi has sent two notices so far. One on 6 May after the suspension and the second one on 20 May after the termination. He is alleging in the notice that due process has not been followed,” said one of the people mentioned above, declining to be named.
“We are in communication with Axis MF on behalf of our client Mr. Viresh Joshi and have duly replied to the unlawful termination notice,” said Chirag M. Shah, counsel, Mansukhlal Hiralal & Co.
Joshi, who was head equity dealer and a fund manager for six mutual fund schemes, was terminated by Axis Mutual Fund on 18 May. The disclosure by the fund house did not go into the details of the charges that led to his termination.
A second fund manager, Deepak Agarwal, was also terminated on 20 May and a similar skeletal statement was issued by the fund house.
Though Joshi’s termination is largely on account of the charges of alleged front running and sharing confidential information about the asset manager’s trades with brokers in Gujarat in return for kickbacks, the fund house has neither confirmed or denied these. The matter is being investigated by the Securities and Exchange Board of India (Sebi) and is separate from the probe being done by the fund house.
“Axis AMC has already provided an update on termination of employment of Viresh Joshi effective 18 May 2022. Axis AMC has no further comments at this stage,” said a spokesperson for Axis MF in an emailed statement.
“In the termination notice Axis Mutual Fund alleged non-cooperation and less than satisfactory answers to the questions posed by the two investigators, Alvarez and Marsal and law firm AZB,” said the second of the two people cited above.
“In the legal notice, Joshi is seeking the relevant sections of the code of conduct he has violated to demonstrate when he violated those sections and how. He was not issued a showcause notice but was only asked to appear before the investigators. He was told by Axis that it is part of a broader inquiry. He has appeared twice before the investigators so far. The investigators had seized his and his family members’ electronic devices to aid in the probe,” said the first person mentioned above.
According to the second person, AZB has sent a 15-page reply to the legal notice on Thursday.
In addition to charges of front running, Joshi is facing allegations of disproportionate assets in comparison to his known sources of income.
“The income tax department is examining the matter. It is scrutinizing the income tax returns filed by Joshi along with all his listed properties. As the allegations against him are of disproportionate assets, this is to verify whether there is a case of tax evasion,” said an IT official.
The fund house basis a preliminary report on the front-running scam on 4 May had suspended Joshi and Agarwal. The two, according to the preliminary findings, had assets disproportionate to their known sources of income and had violated Sebi’s code of conduct for fund managers and dealers.
Amitabh Choudhary, managing director and chief executive officer of Axis Bank, the parent of Axis Mutual fund, told CNBC TV 18 on 23 May that the suo moto investigation will continue for 4-6 weeks and that it has expanded the ambit of the probe to look at other equity analysts too.