The Enforcement Directorate (ED) has arrested Viresh Gangaram Joshi, former Fund Manager of Axis Mutual Fund, in connection with a front-running scam that allegedly generated illegal profits exceeding Rs 200 crore. He was arrested on August 2 under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, and remanded to ED custody till August 8 by a special PMLA court, the central agency said on Sunday.
Multi-City Raids Lead to Arrest and Asset Seizure
Joshi’s arrest comes following searches conducted by the agency on August 1 and 2 across multiple locations including Mumbai, Delhi, Gurugram, Ludhiana, Ahmedabad, Bhavnagar, Bhuj, and Kolkata. These searches were part of an ongoing investigation into illegal profits allegedly made by certain individuals and entities through front-running trades involving confidential information from Axis Mutual Fund, which manages assets worth over Rs 2 lakh crore. The trades in question were executed between 2018 and 2021.
Seized Assets Worth Rs 17.4 Crore Identified as Proceeds of Crime
During the operation, the ED seized assets worth Rs 17.4 crore, including shares, mutual fund units, and bank balances, which it identified as proceeds of crime.
The money laundering probe is based on an FIR registered by Mumbai Police in December 2024, which alleged that Joshi exploited confidential trading information from Axis Mutual Fund to pre-emptively buy and sell securities for personal gain, a practice known as front-running.
Dubai-Based Trading Terminal and Mule Accounts Used for Illicit Gains
According to the agency, Joshi used a trading terminal located in Dubai to execute front-running trades through multiple mule accounts obtained from various brokers. "He not only misused privileged information but also routed the profits through shell entities and bank accounts controlled by him and his family members," the agency said in a statement.
The probe has also revealed the involvement of several other traders and brokers who allegedly received advance trade information from Joshi and carried out similar front-running transactions to generate illegal profits.
According to an ED official statement, the profits generated through these illegal trades have been classified as proceeds of crime under the Prevention of Money Laundering Act (PMLA). The agency said the total value of such proceeds identified so far exceeds Rs 200 crore, though the actual figure could be significantly higher as the investigation continues.
Profits Routed Through Shell Firms and Family Accounts
The fraudulent gains were allegedly routed through multiple shell companies and bank accounts held in the names of the accused persons, their entities, and family members. These financial channels, the ED said, were deliberately structured to conceal the origin of the illicit funds and are currently under investigation.
