ED Arrests Ex-Axis Mutual Fund Manager Viresh Joshi In ₹2 Lakh Crore Front-Running Scam

The Enforcement Directorate (ED) has arrested Viresh Joshi, the then Fund Manager of Axis Mutual Fund in a case linked to alleged cheating of investors to the tune of Rs 2 lakh crore by 'front-running' in trade activities, the agency officials said on Sunday. The ED had conducted search operations on August 1 and 2 at multiple locations in Delhi, Mumbai, Gurugram, Ludhiana, Ahmedabad, Bhavnagar, Bhuj, and Kolkata under the Prevention of Money Laundering Act (PMLA). 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 during the period 2018 to 2021.

ED’s Probe Based on FIR by Mumbai Police

According to the agency officials, ED initiated investigation on the basis of an FIR registered by Mumbai Police in December 2024, which alleged that the accused, Viresh Joshi, the then Fund Manager of Axis Mutual Fund had allegedly exploited confidential information on the trades to be executed on behalf of Axis Mutual Fund, to pre-emptively trade stocks, generating substantial illicit gains. "The accused has, thereby, cheated the investors of Axis Mutual Fund which holds Assets under management of more than Rs. 2 Lakh crore," the ED said in a statement.

Use of Dubai Terminal and Mule Accounts

"The accused had utilised a terminal in Dubai to punch the front running trade orders through mule trading accounts obtained from various brokers. In addition to the accused Joshi, investigation has revealed that many other traders/brokers had also misused the advance inputs on Axis Mutual Fund Trades and indulged in front running to generate illicit trade profits, which is nothing but Proceeds of Crime (POC). The POC generated by various traders/brokers, as identified till date by ED is more than Rs 200 crore, which could be much higher. The proceeds of the fraud were funneled through multiple shell entities and bank accounts beneficially owned by the accused persons/entities and their family members, which is under investigation by ED," the agency said in their statement.

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What is Front-Running?

Front-running refers to an unethical and illegal practice in the securities market where brokers or traders execute orders for their own benefit using advance knowledge of pending client orders. This malpractice compromises market integrity and disadvantages other investors.

Viresh Joshi Remanded to ED Custody Till Aug 8

"During the search operation, ED has frozen POC in the form of shares, mutual funds and bank balance to the tune of Rs 17.4 crore. The mastermind behind the scam, Viresh Joshi, was arrested on Saturday under the provisions of PMLA, 2002 and was produced before the competent court which has granted custody to ED till August 08 for further investigation," said an ED official.