The Enforcement Directorate has arrested Viresh Joshi, former chief trader and fund manager of Axis Mutual Fund, for allegedly orchestrating a Rs 200 crore front-running scam that undermined investor trust and market fairness.
Joshi was taken into custody on Saturday, August 3, and has been remanded to Enforcement Directorate custody until August 8 by a special court under the Prevention of Money Laundering Act.
The alleged scam took place between 2018 and 2021, during Joshi’s tenure as a senior fund manager at Axis Mutual Fund.
Front-running is an illegal and unethical practice where a trader uses confidential knowledge of large upcoming client trades to place personal trades in advance, making illicit gains. According to the Enforcement Directorate, Joshi misused insider information about trades by Axis Mutual Fund to benefit himself and others, defrauding investors and damaging market transparency.
Starting August 1, the Enforcement Directorate carried out search operations in multiple cities including Mumbai, Delhi, Gurugram, Ludhiana, Ahmedabad, Bhavnagar, Bhuj and Kolkata. These raids uncovered a network of brokers, mule accounts and shell companies. During the operation, assets worth Rs 17.4 crore were frozen, including shares, mutual fund units and bank balances.
According to sources, Joshi and his associates allegedly routed illicit profits of over Rs 200 crore through shell firms, personal bank accounts and international trading platforms, including in Dubai. “The accused used mule accounts obtained from brokers to punch trades ahead of Axis Mutual Fund transactions,” the Enforcement Directorate said.
This money laundering investigation stems from a First Information Report filed by Mumbai Police in December 2024. The Income Tax Department had previously conducted related searches in 2022. Until now, the case had been under civil review by the Enforcement Directorate under the Foreign Exchange Management Act.
At the time of the alleged misconduct, Axis Mutual Fund had assets under management exceeding Rs 2 lakh crore. Joshi was removed from his position in 2022 following an internal review of suspicious trading activity. Sources also suggest that several brokers and traders profited from leaked trade information, indicating a wider collusion within the securities market.
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