Axis Mutual Fund has removed two fund managers amid unconfirmed allegations of front running, a malpractice where a market participant has advance information about a transaction in a stock by an institutional investor, and trades in that scrip to benefit from it.

Axis AMC confirmed the suspension in a statement, where the fund house said it has been conducting a suo-moto investigation over the last two months (since February 2022) and that it has used reputed external advisers to aid the investigation.

“As part of the process, two fund managers have been suspended pending investigation of potential irregularities.

“We take compliance with applicable legal/regulatory requirements seriously, and have zero tolerance towards any instance of non-compliance,” it said, without disclosing the identities of the two fund managers or the alleged irregularities.

It is learnt that the two fund managers who have been suspended are Viresh Joshi and Deepak Agrawal. Market regulator Securities and Exchange Board of India (Sebi) has also launched a probe into the matter.

Tweak in schemes

Following the suspension of the two und managers, the fund house has made changes to the schemes that they managed. These schemes include Axis Arbitrage Fund, Axis Banking ETF, Axis Consumption ETF, Axis Nifty ETF,

Axis Technology ETF, Axis Quant Fund and Axis Value Fund. The average assets under management (AUM) of Axis MF stood at Rs 2,59,818.43 crore between January-March 2022 as per AMFI data.

Though the domestic mutual fund has seen increased participation from investors over the past few years, it has also been hit by controversies in the past. Franklin Templeton Mutual Fund has decided to wind up six debt schemes because of redemption pressure and the lack of liquidity in the bond markets amid the Covid-19 pandemic.

The six schemes have assets under management (AUM) of nearly Rs 30,000 crore.