15 Questions
What was the role of Prijesh Kurani in the scheme hatched by Joshi, Desai, and Vora?
To execute trades on behalf of the mule trading accounts by installing a trading terminal in Dubai and punching in trades after being alerted by Joshi.
Why did SEBI consider Joshi's use of multiple mobile phones as a violation of its guidelines?
Because dealers and fund managers are not allowed to use their personal mobile phones during trading hours, and Joshi failed to disclose his personal mobile phones to the fund house.
What was the purpose of the company incorporated in Dubai by Kurani, as per SEBI's order?
To transfer the ill-gotten gains from the front-running activities.
What was the period during which SEBI conducted its probe in the case linked to Axis MF?
Between September 2021 and March 31, 2022.
What market malpractice did Joshi, Desai, and Vora engage in, according to SEBI's order?
Front-running, which involves trading in securities ahead of large client orders for personal gains.
In which city was the trading terminal installed, and whose computer was it installed on?
Dubai, Prijesh Kurani's computer
What was the relationship between Desai and Kurani, according to SEBI's order?
Desai knew Kurani for more than 5 years
Who were the beneficiaries of the ill-gotten gains, and where were the gains transferred?
Joshi, transferred to the bank account of a company in Dubai
Who were the other shareholders in the company incorporated in Dubai, apart from Kurani?
Joshi's father and brother
What was the violation of SEBI guidelines committed by Joshi regarding his mobile phones?
Using personal mobile phones during trading hours
What was the amount of wrongful gains identified by SEBI in the front-running case linked to Axis Mutual Fund?
Rs 30.5 crore
What was the role of Viresh Joshi in Axis Mutual Fund, and how did he use his position to facilitate front-running?
Joshi was the chief dealer of Axis Mutual Fund, and he used his discretion to decide when to place orders for the fund house to facilitate front-running.
What arrangement did Axis AMC have in place to enable its dealers to route orders from their residences during the Covid-19 pandemic?
Axis AMC had installed Bloomberg trading terminals in the laptops of its dealers.
What was the purpose of the trading accounts arranged by Sumit Desai and Pranav Vora in the front-running scheme?
The trading accounts were used as conduit for front-running, and were often registered in someone else's names but remained idle.
How did SEBI's investigation uncover the front-running activities of Joshi and others?
SEBI observed internal emails at the fund house that revealed the scheme.
Study Notes
SEBI's Action Against Front-Running
- SEBI barred Viresh Joshi, former chief dealer of Axis Mutual Fund, and 19 others in a front-running case linked to the fund house.
- SEBI identified Rs 30.5 crore as wrongful gains accrued due to the alleged front-running activities and directed that this amount be impounded from the entities.
Joshi's Role
- Joshi, as the head dealer, had the discretion to decide when to place orders for Axis MF.
- He abused the work-from-home situation during the Covid-19 pandemic to execute front-running trades from trading accounts of entities indirectly connected to him.
Investigation Findings
- SEBI observed that Joshi used to alternate between working from home and his own private dealing room set up at the office to ensure isolation and social distancing.
- Lack of surveillance at the fund house enabled Joshi to hatch a scheme to make money through front-running.
- He approached his friend Sumit Desai to arrange for trading accounts, which were often registered in someone else's names but used as a conduit by Joshi.
Trading Accounts and Mule Accounts
- Desai brought mule accounts from Woodstock Broking Pvt Ltd, while Pranav Vora brought accounts from Marfatia Stock Broking Pvt Ltd.
- These accounts were used to execute trades, whose information Joshi was to provide.
Execution of Trades
- Prijesh Kurani, based in Dubai, was brought into the scheme to execute trades, using a trading terminal installed on his computer.
- Kurani also placed orders in the mule accounts of his own family members.
Ill-Gotten Gains
- The ill-gotten gains were transferred to a bank account of a company specially incorporated in Dubai by Kurani, on behalf of Joshi.
- Joshi's brother and father were also named as shareholders in the company.
SEBI Guidelines
- Dealers and fund managers are not allowed to use their personal mobile phones during trading hours; they can only use recorded phone lines.
- Joshi had multiple mobile phones, which he had not disclosed to the fund house, violating SEBI guidelines.
Front-Running and Probe
- Front running is a market malpractice of trading in securities ahead of large client orders for personal gains.
- SEBI conducted a probe in the case linked to Axis MF between September 2021 and March 31, 2022.
SEBI's Action Against Front-Running
- SEBI barred Viresh Joshi, former chief dealer of Axis Mutual Fund, and 19 others in a front-running case linked to the fund house.
- SEBI identified Rs 30.5 crore as wrongful gains accrued due to the alleged front-running activities and directed that this amount be impounded from the entities.
Joshi's Role
- Joshi, as the head dealer, had the discretion to decide when to place orders for Axis MF.
- He abused the work-from-home situation during the Covid-19 pandemic to execute front-running trades from trading accounts of entities indirectly connected to him.
Investigation Findings
- SEBI observed that Joshi used to alternate between working from home and his own private dealing room set up at the office to ensure isolation and social distancing.
- Lack of surveillance at the fund house enabled Joshi to hatch a scheme to make money through front-running.
- He approached his friend Sumit Desai to arrange for trading accounts, which were often registered in someone else's names but used as a conduit by Joshi.
Trading Accounts and Mule Accounts
- Desai brought mule accounts from Woodstock Broking Pvt Ltd, while Pranav Vora brought accounts from Marfatia Stock Broking Pvt Ltd.
- These accounts were used to execute trades, whose information Joshi was to provide.
Execution of Trades
- Prijesh Kurani, based in Dubai, was brought into the scheme to execute trades, using a trading terminal installed on his computer.
- Kurani also placed orders in the mule accounts of his own family members.
Ill-Gotten Gains
- The ill-gotten gains were transferred to a bank account of a company specially incorporated in Dubai by Kurani, on behalf of Joshi.
- Joshi's brother and father were also named as shareholders in the company.
SEBI Guidelines
- Dealers and fund managers are not allowed to use their personal mobile phones during trading hours; they can only use recorded phone lines.
- Joshi had multiple mobile phones, which he had not disclosed to the fund house, violating SEBI guidelines.
Front-Running and Probe
- Front running is a market malpractice of trading in securities ahead of large client orders for personal gains.
- SEBI conducted a probe in the case linked to Axis MF between September 2021 and March 31, 2022.
The Securities and Exchange Board of India (SEBI) has banned Viresh Joshi and 19 others from Axis Mutual Fund in a front-running case, directing them to impound Rs 30.5 crore as wrongful gains.
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