Fund Manager Arrested In India In Multi-Million-Dirham Scam Linked To Dubai Terminal

(MENAFN- Khaleej Times)

India's financial crime agency has arrested a former fund manager from Axis Mutual Fund in connection with a major front-running scheme linked to a Dubai-based trading terminal, the Enforcement Directorate (ED) said on Sunday (August 3).

Viresh Joshi, the former chief trader at Axis Mutual Fund - one of India's largest asset management firms - was arrested on August 2, under the Prevention of Money Laundering Act (PMLA). A special court has ordered that he remain in ED custody until August 8.

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The arrest comes after a series of nationwide raids conducted by the ED on August 1 and 2, targeting multiple locations across India including Mumbai, Delhi, Gurugram, Ludhiana, Ahmedabad, Bhuj, Bhavnagar, and Kolkata. During these operations, authorities froze assets suspected to be proceeds of crime, including mutual funds, shares, and bank balances worth approximately Dh7.4 million.

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Axis Mutual Fund, part of the Axis Bank Group, manages over Dh85 billion in assets for both retail and institutional investors.

According to the ED, Joshi misused confidential trading data between 2018 and 2021 to place pre-emptive trades through mule accounts, a practice known as front-running. He allegedly shared this non-public information with brokers who had access to a trading terminal in Dubai, enabling them to execute trades on his instructions and pay him kickbacks in cash.

In a previous press release, ED stated that two overseas entities, including one incorporated in Dubai, were set up using embezzled funds. The proceeds were allegedly used to acquire immovable properties in the UK and form fixed deposits and investments in India, the ED said.

Veteran Dubai-based investor Shankar Sharma, founder of GQuant Investech, said he hoped the case would be pursued to its conclusion.“Market integrity depends on how decisively such violations are dealt with,” Sharma told Khaleej Times.

Front-running is an illegal market practice where traders exploit advance knowledge of large client trades for personal gain. It is considered a serious breach of investor trust and is banned under Indian securities law.

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