Axis AMC overhauls top management amid Sebi probe in front running case

Axis Asset Management (AMC) just had a top management overhaul. The country's seventh largest fund house, this week, announced that Chandresh Nigam, its MD and CEO, would be moving on to pursue other personal and professional interests. B. Gopkumar, the MD and CEO of Axis Securities, would replace Nigam. The fund house also roped in Ashish Gupta, Credit Suisse's head of India equity research, as its chief investment officer.

The management reshuffle, announced this week, is significant and comes less than two weeks after the Securities and Exchange Board of India (Sebi) barred 21 entities, including Axis AMC's former head trader and fund manager Viresh Joshi, from the capital markets over a front running case.

Nigam had joined Axis AMC as head of equities back in July 2009 and took over as MD and CEO in May 2013. Under his leadership, Axis AMC grew in size and scale. As of December 2022, the fund house's average assets under management stood at over Rs 2.48 lakh crore, according to Association of Mutual Funds of India (AMFI) data.

However, last year, the fund house was hit with allegations of front running involving some of its employees. In February 2022, Axis AMC launched an investigation following the allegations. Viresh Joshi was eventually sacked.

Front running refers to a trader buying or selling shares based on exclusive/ insider knowledge that may not be in the public domain. Such a practice is illegal in many markets including India.

On February 28 this year, Sebi issued an order barring Joshi and 20 others from the securities market front running activities.
"Viresh Joshi has glaringly abused his employment as a dealer with Axis MF by taking pecuniary advantages of the non-public information about the impending orders of his employer fund, i.e. Axis MF, for his personal gains," the regulator had said in its order.

The order further noted that Joshi would have passed on confidential non-public information regarding the impending trade orders of Axis AMC to individuals other than for whom it was intended for i.e., other than the empaneled stock brokers of the fund house.

Sebi order also stated that the entities collectively made wrongful gains of Rs 30.56 crore from their trading activities.
According to Axis AMC, Nigam had requested not to be considered for reappointment as MD and CEO for another term. The board, which met on Thursday, accepted his decision to be at the helm till his current term expires on April 30, 2023.

Gopkumar, a financial services industry veteran of nearly three decades, had joined Axis Securities as MD and CEO in October 2019. He will replace Nigam as the MD and CEO of Axis AMC as a part of its internal succession plan, it said.

Apart from Gopkumar, Axis AMC also gets a new CIO in Ashish Gupta, head of India equity research at Credit Suisse. This is another step taken by the found house to strengthen its leadership amid the front-running scandal.

Gupta has tracked Indian markets for over 25 years and actively covered 130 stocks with an aggregate market cap of over $2 trillion. According to Axis AMC, Gupta covered the banking sector in 13 Asian economies as head of APAC banks at Credit Suisse and was one of the earliest to identify the asset quality cycle in Indian banks back in 2011.

Axis AMC will look to capitalising on Gopkumar's experience in building large distribution businesses and Gupta's deep understanding of the capital markets as it looks towards its next phase of growth.