Former Axis Mutual Fund (MF) manager Viresh Joshi has filed an appeal before the Securities Appellate Tribunal (SAT) seeking certain documents from the Securities and Exchange Board of India (Sebi) regarding a case related to his alleged involvement in front-running activities.
The case revolves around a series of allegations against Joshi, including front-running, receiving bribes from brokers, and placing trade orders at inflated prices against certain entities associated with Axis MF. Front-running typically involves buying a stock before an expected large transaction by a mutual fund, which is likely to raise the share price, thereby benefiting the front-runner.
In his appeal before SAT, Joshi’s legal representative emphasized the importance of obtaining these documents for the sake of natural justice. While some documents have been provided by Sebi, Joshi’s legal team contends that there are additional documents crucial to their defense that have not been furnished yet.
Advocate Nirman Sharma, representing Joshi, highlighted the need for Sebi to provide all relevant documents relied upon in its investigation order. The defense team argues that the availability of these documents is essential to present their case effectively and ensure a fair hearing.
On the other hand, Sebi’s stance is that it has already provided all relevant documents to Joshi and that the additional documents requested are not pertinent to his case. Vishal Kanade, representing Sebi, reiterated the regulator’s position that it has fulfilled its obligations by providing the necessary documents, and anything beyond that is unnecessary for Joshi’s defense.
In March 2023, Sebi issued an interim order directing the impounding of ₹30 crore in wrongful gains related to the Axis front-running case. Joshi, along with other implicated entities, was instructed to jointly pay this amount. Additionally, they were barred from accessing the capital markets, as per the directives of the 100-page order.
In response to Sebi’s order, Joshi approached the appellate tribunal seeking relief and contesting the allegations leveled against him. During the recent hearing at SAT, both parties presented their arguments, following which SAT instructed Sebi to submit a detailed reply within two weeks. The tribunal scheduled a comprehensive hearing on March 14 to further deliberate on the matter.
The case underscores the significance of transparency and due process in regulatory proceedings concerning financial markets. Joshi’s appeal for access to relevant documents aligns with the principles of natural justice, ensuring that all parties have a fair opportunity to present their case and defend themselves against allegations.
Front-running and other forms of market manipulation pose serious risks to the integrity and fairness of the financial system. Regulators like Sebi play a crucial role in safeguarding investor interests and maintaining market integrity by investigating and penalizing such activities.
As the legal proceedings unfold, the outcome of Joshi’s appeal will have implications not only for him but also for the broader regulatory framework governing mutual funds and capital markets in India. It underscores the importance of robust enforcement mechanisms and adherence to procedural fairness in upholding market integrity and investor confidence.
