ED Arrests Ex-Axis Mutual Fund Manager In 'Front-Running' Case

(MENAFN- Live Mint) The Enforcement Directorate (ED) has arrested Viresh Joshi, a former chief trader and fund manager of Axis Mutual Fund, in connection with a 'front-running' case involving alleged cheating of investors to the tune of ₹200 crore.

Joshi was taken into custody on Saturday under the anti-money laundering law and has been remanded to ED custody until August 8 by a special Prevention of Money Laundering Act (PMLA) court, reported PTI.

The case of front-running involves unethical and illegal practice in the securities market in which brokers or traders execute orders for their personal benefit by using advance knowledge of pending client orders. This malpractice undermines market integrity and puts other investors at a disadvantage.

ED investigation and allegations

The federal probe agency's investigation stems from an FIR registered by the Mumbai Police in December 2024, alleging that Joshi, while serving as a fund manager at Axis Mutual Fund, "exploited" confidential information on the trades to be executed on behalf of the fund house.

He is accused of pre-emptively trading stocks to generate substantial "illicit" gains, thereby cheating the investors of Axis Mutual Fund, which holds assets under management of more than ₹2 lakh crore, the ED told PTI.

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The ED launched searches in the case on August 1, across multiple locations in Delhi, Mumbai, Gurugram, Ludhiana, Ahmedabad, Bhavnagar, Bhuj and Kolkata.

The agency stated that, "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.”

According to ED, "The accused had utilised a terminal in Dubai to punch the front-running trade orders through mule trading accounts obtained from various brokers.

Other than the case involving Joshi, the investigation has further revealed that many other traders/brokers have also misused the advance inputs on Axis Mutual Fund trades to indulge in front-running, generating illicit trade profits, which are deemed“nothing but proceeds of crime," the agency alleged.

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The agency estimates the illicit funds generated by various traders/brokers to exceed ₹200 crore, with potential for this sum to be much higher, according to a news report.

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