Posted: Date Posted – 1:42 PM, Wed – 25 May 22
Mumbai: Axis mutual fund had a combined corpus of Rs 2.59 lakh crore at the end of March 2022 and was the seventh largest mutual fund by AUM (assets under management) in the company. As of November 21, 2021, the fund had reallocated various plans to different fund managers. Some of the projects were jointly managed by Viresh Joshi and Deepak Agarwal.
They were co-responsible in some regimes, individually responsible and also twinned with others in different regimes. Viresh Joshi also doubled as chief trader and therefore had access to much more information than other fund managers.
At some point on Feb. 22, there were whispers within the mutual fund industry about some of Axis’ fund managers having earnings significantly higher than their disclosed sources of income.
The mutual fund industry is a highly organized and regulated industry where bank accounts, stock holdings, and trading accounts must be disclosed in advance. Furthermore, any equity transaction must be conducted in a designated manner and is permitted not only with pre-clearance, but also with a designated broker only.
While the matter as publicly disclosed was under investigation from February 22, it is surprising that it took more than three months to come to a conclusion and that the two managers mentioned above above are dismissed. What is really surprising and shocking is that there are less than 1,000 Lamborghinis in the country right now. To find out in whose name they are registered with an agency, it would take a few hours or, in case, it might take a few days. This is the total number of cars sold since its inception. For the police, discovering from the license plate the beneficiary of the car is child’s play.
I wouldn’t like to discuss the salaries paid to fund managers, but suffice it to say that it doesn’t allow for the luxury of buying a car with a public price of Rs 350 lakh to Rs 500 lakh or thereabouts. I’m sure that kind of emoluments might not be available even to mutual fund CIOs.
One could be sure that the car would not have been purchased in the name of the money manager who was sacked or in the name of a member of his family. It should be in the name of someone who was accommodating and made the transaction easy for the fund manager.
What could be the benefit for the facilitator? It must be related to the activities of the fund manager who was also a broker. Details of the transactions to be executed have been disclosed so that illegal gains can be made by the fund manager/dealer as well as the person/entity who facilitated the use of the car.
Large amounts were involved and they are said to have passed through undisclosed bank accounts. Careful examination would quite easily yield results and details for all of these activities. While the Managing Director and CEO of Axis Bank, Amitabh Chaudhry, has publicly stated that no one will be spared, until the end of the investigation, all senior executives of Axis Mutual Fund above the two managers of funds must be placed under supervision. These kinds of serious breaches cannot occur without the active participation and connivance of the top.
What happened is serious and cannot be tolerated. Any ill-gotten wealth discovered must be confiscated and returned to the rightful claimants, who in this case would be the unitholders of the various mutual funds managed by these two fund managers. It is of paramount importance that the investigation be carried out at the highest level and on a priority basis, as time is running out in such cases.
The use of external agencies, who know their job better like the Income Tax Department and others, should be requested to expedite the same. Mutual funds, which survive thanks to investor confidence, must once again restore confidence.