The Enforcement Directorate (ED) has arrested Viresh Gangaram Joshi, the former chief trader and fund manager at Axis Mutual Fund. He was taken into custody under the anti-money laundering law. Joshi is accused of cheating investors out of ₹200 crore through a practice known as ‘front-running’.
A special PMLA (Prevention of Money Laundering Act) court has ordered Joshi to remain in ED custody until August 8. His arrest occurred on Saturday after the agency carried out raids in multiple locations. These included cities such as Ahmedabad, Bhavnagar, Bhuj, Delhi, Mumbai, and Kolkata.
Front-running is an illegal activity in the securities market. It occurs when brokers or traders use advance knowledge of pending client orders to execute their own orders first, thus making a profit at the expense of their clients.
This case began with an FIR filed by the Mumbai Police in December 2024. The FIR alleges that Joshi, while managing funds for Axis Mutual Fund, exploited confidential trading information. He is said to have made pre-emptive trades in stocks, which led to substantial illegal profits.
Reports indicate that Joshi used a trading terminal in Dubai to carry out these front-running activities. He allegedly utilized mule trading accounts that he obtained from various brokers to place these orders.
Moreover, the investigation has revealed that other traders and brokers also misused advance information from Axis Mutual Fund trades for their gain. The ED claims that these activities generated illicit profits, which they categorize as proceeds of crime.
In the course of their investigation, the ED froze assets worth ₹17.4 crore. This includes shares, mutual funds, and bank balances linked to Joshi and others involved in the scam.
The agency continues to investigate the extent of the scam and the number of individuals involved. Joshi’s arrest has brought significant attention to the issue of front-running in India’s financial markets.
The implications of this case could be far-reaching, as it raises concerns about the integrity of mutual funds and the safeguards in place to protect investors. The ED is committed to uncovering the full extent of the allegations and ensuring that those responsible are held accountable.
As this case unfolds, many investors will be watching closely to see how the authorities handle the situation and what measures will be taken to prevent such scams in the future. The financial market in India is vast, and maintaining trust is crucial for its stability and growth.
For now, Viresh Joshi’s arrest serves as a stark reminder of the importance of transparency and ethics in the financial sector. Investors need to feel secure that their funds are managed responsibly and ethically. The ED’s actions reflect a growing commitment to combat financial crimes and protect investor interests.