The Enforcement Directorate (ED) has arrested Viresh Joshi, former chief trader and fund manager of Axis Mutual Fund, in a major money laundering case linked to an alleged front-running scheme that defrauded investors of over Rs 200 crore. A special Prevention of Money Laundering Act (PMLA) court granted ED custody of Joshi until August 8 following his arrest on Saturday, as the agency intensifies its probe into the financial misconduct.
Front-running, an unethical and illegal practice in the securities market, involves traders exploiting confidential client order information to execute trades for personal gain, compromising market fairness and harming investors. The ED’s investigation, initiated after a Mumbai Police FIR filed in December 2024, accuses Joshi of leveraging sensitive trade details of Axis Mutual Fund—managing assets worth over Rs 2 lakh crore—to preemptively trade stocks from 2018 to 2021, generating substantial illicit profits.
The agency revealed that Joshi allegedly used a trading terminal in Dubai to place front-running orders through mule accounts sourced from various brokers. “In addition to Joshi, several other traders and brokers misused advance information on Axis Mutual Fund trades to engage in front-running, amassing illegal profits classified as proceeds of crime,” the ED stated. Preliminary estimates suggest these illicit gains exceed Rs 200 crore, with the potential for even higher figures as the investigation unfolds.
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On August 1, the ED conducted extensive searches across multiple cities, including Delhi, Mumbai, Gurugram, Ludhiana, Ahmedabad, Bhavnagar, Bhuj, and Kolkata, targeting premises linked to the case. The operation resulted in the freezing of shares, mutual funds, and bank balances worth Rs 17.4 crore. The agency further alleged that the illicit funds were laundered through a network of shell companies and bank accounts controlled by the accused and their family members, complicating the financial trail.
The case also draws attention to earlier scrutiny, as the Income Tax Department had conducted searches in 2022 related to the same matter. Additionally, the ED is probing the case under the Foreign Exchange Management Act (FEMA) for potential violations involving cross-border transactions. The revelations have raised concerns about oversight in India’s financial markets, with Axis Mutual Fund’s investors allegedly cheated through Joshi’s actions. As the investigation continues, the ED aims to uncover the full extent of the network involved and recover additional proceeds of the crime.
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