The regulator also said entry into the dealing room of people by using someone else's access card and discussion by fund managers and dealers during market hours were not done through recorded mode.
Mumbai: Axis Asset Management Company, Axis Mutual Fund Trustee, its former chief executive Chandresh Nigam, and three former officials have settled a case of violation of mutual fund rules with Sebi by paying ₹6.2 crore as the settlement amount.
The other three officials of the asset management company (AMC) who have settled with Sebi include former compliance officer, Darshan Kapadia, former head of equity, Jinesh Gopani, and former dealer Pawan Jhangiani. The regulator alleged that the fund house had failed to ensure an adequate control environment for dealing room activities.
"Failure of AMC to monitor the activities of the dealers resulting in front-running of Axis Mutual Fund trade by Viresh Joshi," Sebi said in an order on Tuesday.
It alleged that as the majority of the active trades of the AMC were concentrated with one dealer, namely Joshi, the dealing room activities were with one dealer. In the absence of dealers, AMC had made a temporary arrangement with an equity research analyst and investment associate who could be assigned the role of alternate dealers.
Dealers were negotiating with multiple brokers and engaging in trade negotiations on behalf of both Axis mutual funds and in the names of connected entities.
It said the asset manager allowed unauthorised access into the dealing room during market hours, access to the dealing room was not revoked for certain employees from other activities, failed to ensure that the dealing room is used for activities related to trade execution only and to monitor the communication of dealers and fund manager during market hours through recorded channels.
The regulator also said entry into the dealing room of people by using someone else's access card and discussion by fund managers and dealers during market hours were not done through recorded mode.
"Chandresh Nigam, being the chief executive officer of the AMC, also failed to ensure that the activities of the mutual fund are in compliance with the MF regulations...and to ensure that the AMC has adequate systems in place to ensure that the code of conduct provided for dealers or fund managers are adhered to in letter and spirit," the regulator said.
The other three officials of the asset management company (AMC) who have settled with Sebi include former compliance officer, Darshan Kapadia, former head of equity, Jinesh Gopani, and former dealer Pawan Jhangiani. The regulator alleged that the fund house had failed to ensure an adequate control environment for dealing room activities.
"Failure of AMC to monitor the activities of the dealers resulting in front-running of Axis Mutual Fund trade by Viresh Joshi," Sebi said in an order on Tuesday.
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It alleged that as the majority of the active trades of the AMC were concentrated with one dealer, namely Joshi, the dealing room activities were with one dealer. In the absence of dealers, AMC had made a temporary arrangement with an equity research analyst and investment associate who could be assigned the role of alternate dealers.
Dealers were negotiating with multiple brokers and engaging in trade negotiations on behalf of both Axis mutual funds and in the names of connected entities.
It said the asset manager allowed unauthorised access into the dealing room during market hours, access to the dealing room was not revoked for certain employees from other activities, failed to ensure that the dealing room is used for activities related to trade execution only and to monitor the communication of dealers and fund manager during market hours through recorded channels.
The regulator also said entry into the dealing room of people by using someone else's access card and discussion by fund managers and dealers during market hours were not done through recorded mode.
"Chandresh Nigam, being the chief executive officer of the AMC, also failed to ensure that the activities of the mutual fund are in compliance with the MF regulations...and to ensure that the AMC has adequate systems in place to ensure that the code of conduct provided for dealers or fund managers are adhered to in letter and spirit," the regulator said.
