The department had also found that the said fund manager and chief trader was sharing specific trade related information with brokers/middlemen and persons located in power certain foreign jurisdictions. “These persons in turn, used such information for illicit gains in the share market by trading in such scrips either in their own account or account of their clients,” the department said in a statement without naming Joshi. However sources confirmed that the fund manager in question is Joshi.
The department also said that Joshi’s family members have admitted in their statements that the unaccounted cash generated from the operations was routed mainly through Kolkata based shell entities into their bank accounts. “From these bank accounts, funds have been further diverted into the bank accounts of companies/entities incorporated in India and other low tax jurisdictions. The gleaning of seized evidences has exposed the nexus between the ex-fund manager, middlemen, share brokers, and entry operators,” the statement added.
On July 28, the Mumbai investigation wing of the IIT department that had conducted searches at more than 25 premises, spread across Mumbai, Ahmedabad, Vadodara, Bhuj and Kolkata.
“ Evidences of large-scale unaccounted investment in cash loans, fixed deposits, immovable properties and their renovation, etc. have also been found and seized. More than 20 lockers have been put under restraint. So far, unaccounted deposits exceeding Rs. 55 crore have been seized,” the department further said
Joshi wasn’t immediately available for comment.
Joshi, who was sacked by the asset management company amid allegations of wrongdoings including front-running and receiving kickbacks from brokerages, is also being investigated by the Securities and Exchange Board of India for violations of the securities law.
Tax officials had sought details from Sebi after the market regulator searched 16 entities including offices of Axis Mutual Fund, stockbrokers and some other individuals, said a person familiar with the developments.
Joshi was sacked in May by the asset management company citing alleged violation of its ethics and code of conduct.
Front-running, which he is accused of being involved, is trading stocks or any other financial assets by a broker who has inside knowledge of a future transaction that is about to affect its price substantially.
Investigators have found that Joshi has at least six residential properties in Mumbai – two flats in the plush locality of Lower Parel and four flats in suburban Ghatkopar, the people said.
“It’s more than a front-running case. Last 18 months, Joshi was carrying out illegal activities through several entities. The entire work from home situation was misused by him,” said another person familiar with the development.
“Sebi’s investigation is still going on, it is recording statements of entities involved. Once the probe is completed, all the information gathered would be officially communicated to all the relevant agencies,” the official added.
A letter received by Axis Mutual’s top management, raising questions about the lifestyle of Joshi, was the trigger for the investigation. His lifestyle came under scrutiny as it was speculated that he drove a premium sports car.
The car is not owned by him but belongs to someone else, the people said. Investigators found this out when they went to search his premises.
Joshi’s employment with Axis Mutual was terminated following an investigation by a forensic auditor appointed by the asset manager. The probe was conducted to ascertain whether its executives were involved in front-running, received kickbacks and executed trades that were disadvantageous to the schemes.
In June, Joshi had sued the fund house seeking Rs 54 crore in damages for alleged wrongful termination and not following the due process of law.