The Securities and Exchange Board of India has put to rest the front running allegations against a former Axis Mutual Fund manager, Deepak Agrawal. This comes after a settlement in which Agrawal agreed to pay Rs 85.8 lakh.
Additionally, 43,000 mutual fund units have already been redeemed from him.
The case arose from a forensic audit of Axis Mutual Fund, conducted by SEBI, covering the period between April 1, 2020, and Sept 30, 2022.
The audit flagged multiple violations, including the sharing of stock tips and sensitive information related to Axis Mutual Fund’s trading strategies with outsiders, failure to disclose directorships, and demands for favours in exchange for information. These actions were alleged to have violated SEBI’s Mutual Fund Regulations and guidelines on professional conduct and governance.
A show cause notice was issued to Agrawal in January, asking why action under SEBI norms should not be taken against him. In March, he proposed to settle the proceedings without admitting or denying the allegations.
The SEBI’s High-Powered Advisory Committee or the HPAC recommended that Agrawal pay a monetary settlement of Rs 85.8 lakh and that 43,310.73 units allotted to him — 38,342.684 units from Axis Quant Fund and 4,968.044 units from Axis Value Fund — be clawed back and credited to the respective schemes.
The HPAC approved the settlement in June, and the decision was confirmed by SEBI’s whole-time members in August.
Agrawal confirmed payment of the settlement amount on Sept. 12, and Axis Mutual Fund confirmed the redemption and crediting of the units back to the schemes.
SEBI’s order clarified that no further enforcement action will be taken against Agrawal for the violations mentioned in the show-cause notice, unless it is later found that the representations made during the settlement were false or misleading.
