Capital markets regulator Sebi on Tuesday barred 21 entities, including Axis Mutual Fund’s former fund manager Viresh Joshi, from the securities market in connection with the front-running case at the fund house.

In addition, the regulator has ordered impounding wrongful gains worth Rs 30.56 crore earned by them through“prima facie” front-running activities, according to an interim order. Front-running refers to an illegal practice in the stock market where an entity trades based on advance information from a broker or analyst before the information has been made available to their clients.

The present proceeding involves the front running of trades of Axis MF (Big Client)deals with a few suspected entities and trading members who have worked in close coordination to front run the trades of the Big Client during the period from September 2021 to March 31, 2022.

During the investigation, Sebi found that entities connected to Joshi, the then-chief dealer of Axis MF, were observed to have traded in different securities ahead of the impending orders placed on behalf of the Big Client. Subsequently, soon after the Big Client’s orders were placed, these connected entities squared off their earlier trade positions taken on the exchange platform.

Substantial proceeds of profit were generated in the trading accounts of these connected entities by placing orders ahead of and in anticipation of the price movement of scrips in a certain direction on account of the impending large buy or sell orders of the Big Client, Sebi said.

It was also noted that the trading accounts of the connected entities from which the front-running trades were executed were arranged by Sumit Desai, apparently a market operator at the behest of Joshi.

Also, Desai had introduced Prijesh Kurani, based out of Dubai, to Joshi and was entrusted with the task of placingthe orders for front-running the trades of the Big Client in the trading accounts of the connected entities.

PTI