sebi:SO//PSD/2024-25/8217-8222

SEBI · SEBI · 2023-05-19 · Ananth Narayan G. and Kamlesh C. Varshney, Whole Time Members

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Facts / Headnote

Settled

Provisions invoked

Regulations

Parties

Holding

Any proceedings that may be initiated for the violations mentioned at paragraphs 1 and 2 are settled in respect of the Applicants upon joint and several payment of Rs. 6,27,30,000, and SEBI shall not initiate any enforcement action against the Applicants for the said violations.

Full text

2 Applicant Regulations allegedly violated Axis Asset Management Company Limited Regulations 25 (6B) (a) and (b), Regulations 25 (6C) (a) and (b) along with Code of Conduct Clauses 1(a), 1(b), 1(c), 1(d) 1(e), 1(f), 1(g), 1(h), 1(j), 2(a), 2(b) 2(c) , 2(f) and 3.2(a) specified in Part B of Fifth Schedule of the SEBI (Mutual Fund) Regulations,1996 (hereinafter referred to as “MF Regulations”) along with Para 6.6.2.2 and Para 6.6.3.2 (f) of the SEBI Master Circular for Mutual Fund dated May 19, 2023 read with Regulation 25 (3) of the MF Regulations; Para 12.29.4 of SEBI Master Circular for Mutual Funds dated May 19, 2023. Regulation 24 (b) of the MF Regulations. Regulation 10(a) of the MF Regulations. Paras 8 and 20 of Annexure 6 of the SEBI Master Circular for Mutual Funds dated May 19, 2023 read with Regulation 25 (3) of the MF Regulations. Axis Mutual Fund Trustee Limited Regulation 18(9) read with Regulation 10 (a) of the MF Regulations. Mr. Chandresh Nigam Regulations 25(6A) (a) and 25(6A)(b) of the MF Regulations. Mr. Darshan Kapadia Regulation 18(4)(d) of the MF Regulations. Mr. Jinesh Gopani Para 6.6.2.2 of the SEBI Master Circular for Mutual Funds dated May 19, 2023. Mr. Pawan Jhangiani Code of Conduct prescribed under Part B of the MF Regulations read with Regulation 25 (6C)(b) of the MF Regulation and Clause 2 (b) of the Code of Conduct.

3 a. Failure to ensure adequate and effective control environment for the following dealing room activities: i. Access to the dealing room was not revoked for certain employees from other activities; ii. Unauthorized access into the dealing room during market hours; iii. Failure to ensure that the dealing room is used for activities related to trade execution only. iv. Failure to monitor the communication of dealers and fund manager during market hours through the recorded modes/channel; v. Entry into the dealing room of people by using someone else’s access card; vi. Discussion by Fund Managers and Dealers during market hours were not done through recorded mode; vii. Access doors to the dealing rooms/ Investment areas being in released state for a long period i.e., anyone without access card could enter the dealing rooms; viii. Failure of AMC to monitor the activities of the dealers resulting in front running of Axis Mutual Fund trade by Mr. Viresh Joshi. ix. Failure of AMC to have a system based monitoring mechanism to ensure compliance with the requirements of dealing room.

4 d. Further, employees of the AMC were alleged to be providing stock tips, divulging specific information about the scrips, details of the schemes of Axis Mutual Fund in which they took and /or squared off position and they were also alleged to have passed on information/advise/induce to buy/sell securities, which are being bought and/or sold by the Mutual Fund of which the AMC is the investment manager. Accordingly, the AMC is alleged to have failed to have adequate processes to prevent, detect and remediate non-compliance by its employees.

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Source: SecMarx — sebi:SO//PSD/2024-25/8217-8222. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.