New Delhi :Veresh Joshi, former fund manager of Axis Mutual Fund, who is under investigation for alleged front running, has sent a legal notice to the fund house alleging wrongful termination, having direct knowledge of the matter two people said.
“Joshi has sent two notices so far. One on 6 May after the suspension and the other on 20 May after the dismissal. He is alleging in the notice that due process has not been followed,” said one of the people above, who spoke anonymity.
“We are in communication with Axis MF on behalf of our client Mr. Viresh Joshi and have duly responded to the illegal termination notice,” said Chirag M. Shah, counsel for Mansukhlal Hiralal & Co.
Joshi, who was the head equity dealer and fund manager of six mutual fund schemes, was terminated by Axis Mutual Fund on May 18. The disclosure by the fund house did not go into details of the allegations that led to their termination.
Another fund manager, Deepak Agarwal, was also sacked on May 20 and a similar skeleton statement was issued by the fund house.
While Joshi’s dismissal is largely due to allegations of alleged front-running and sharing confidential information about the asset manager’s business with brokers in Gujarat, the fund house has neither confirmed nor denied it. . The matter is being probed by the Securities and Exchange Board of India (SEBI) and is separate from the investigation by the fund house.
“Axis AMC has already provided an update on the termination of employment of Veeresh Joshi with effect from May 18, 2022. Axis AMC has no further comment at this stage,” an Axis MF spokesperson said in an emailed statement.
“In the termination notice Axis Mutual Fund alleges non-cooperation and less than satisfactory answers to questions posed by two investigators, Alvarez and Marsal, and law firm AZB,” said the second of the two people cited above.
“In the legal notice, Joshi has sought relevant sections of the code of conduct, which he has violated, to demonstrate when and how he violated those sections. He was not issued a show cause notice, instead he was only asked to appear before the investigators. Axis told him that it was part of a wider investigation. He has appeared before investigators twice so far. Investigators had confiscated electronic devices belonging to him and his family members to aid in the investigation.”
According to another person, AZB sent a 15-page reply to the legal notice on Thursday.
Apart from front running charges, Joshi is also facing charges of disproportionate assets disproportionate to his known sources of income.
“The Income Tax Department is probing the matter. It is scrutinizing income tax returns with all listed properties filed by Joshi. As the charges against him are of disproportionate assets, it is to verify whether there is a case of tax evasion,” said an IT official.
The fund house had on May 4 suspended Joshi and Agarwal on the basis of preliminary reports of the ongoing scam. As per preliminary findings, both had assets disproportionate to their known sources of income and violated SEBI’s code of conduct for fund managers and dealers.
Amitabh Choudhary, managing director and chief executive officer of Axis Bank, the parent of Axis Mutual Fund, told CNBC TV18 on May 23 that the automatic probe will continue for 4-6 weeks and has expanded the scope of the investigation. Also look at other equity analysts.