Viresh Joshi, former chief trader and fund manager at Axis Mutual Fund, has been arrested under the anti-money laundering law for allegedly defrauding investors of over ₹200 crore through front-running trades, the Enforcement Directorate (ED) said on August 3.
A special PMLA court has remanded Joshi, who was taken into custody on Saturday, to ED custody till August 8, the agency said.
Front-running is an illegal practice where traders use advance knowledge of client orders to execute trades for personal gain. This undermines market fairness and disadvantages other investors.
The ED began searches on August 1 across locations including Delhi, Mumbai, Gurugram, Ludhiana, Ahmedabad, Bhavnagar, Bhuj, and Kolkata.
The agency has been probing the case under FEMA provisions, following an earlier Income Tax Department investigation in 2022.
“The search operations were part of an ongoing investigation into the illegal profits made by certain entities/persons by indulging in front-running trade activities in scrips traded by Axis Mutual Fund from 2018 to 2021,” the ED stated.
The money laundering case is based on a December 2024 FIR filed by Mumbai Police. It alleged that Joshi, as Axis Mutual Fund’s fund manager, exploited confidential trade information to execute advance trades, raking in significant illicit gains.
According to the ED, Joshi “cheated” investors of Axis Mutual Fund, which manages assets worth over ₹2 lakh crore.
“The accused had utilised a terminal in Dubai to punch the front-running trade orders through mule trading accounts obtained from various brokers,” the agency added.
The probe has also revealed that several traders and brokers misused insider information to front-run Axis Mutual Fund’s trades, collectively generating over ₹200 crore in illicit profits—a figure that could increase as the investigation progresses.
The ED said the fraudulent gains were routed through multiple shell entities and bank accounts linked to the accused and their families.
Assets worth ₹17.4 crore, including shares, mutual funds, and bank balances, were frozen during the searches.
(With inputs from PTI)
