The Enforcement Directorate (ED) on Friday, August 1, conducted search operations at several premises across seven cities, Delhi, Gurugram, Kolkata, Ludhiana, Ahmedabad, Bhavnagar, and Bhuj, as part of an investigation into a large-scale front-running scam involving a former employee of Axis Mutual Fund. The action was conducted under the Prevention of Money Laundering Act (PMLA), 2002.
The raids were not at Axis Mutual Fund offices, but targeted brokers and traders who allegedly colluded to execute illegal trades using non-public information from mutual fund transactions.
ED action follows FIR against ex-fund manager of Axis Mutual Fund
The ED’s probe stems from a December 2024 FIR filed by Mumbai Police, which named Viresh Joshi, former fund manager at Axis Mutual Fund, as the key accused. Joshi is alleged to have misused confidential trading information between 2018 and 2021, placing personal trades ahead of the fund’s official transactions and generating illicit profits.
The front-running activities defrauded investors of Axis Mutual Fund, which manages assets worth over Rs 2 lakh crore.
Dubai terminal used to punch illicit trades; over Rs 200 crore traced
ED investigations have revealed that Joshi executed trades through a trading terminal in Dubai, using mule accounts obtained from Indian brokers. Several other brokers and traders were also found to have exploited advance inputs on Axis Mutual Fund’s trades.
So far, the ED has identified proceeds of crime (PoC) worth over Rs 200 crore, funnelled through shell entities and layered bank accounts operated by the accused and their family members. Officials believe the actual amount could be significantly higher.
What is front-running?
Front-running is a criminal practice in the stock market in which brokers or traders employ prior knowledge of huge client orders to execute their own transactions and make money out of the movement of the market due to those client trades. Front-running undermines investor confidence and distorts financial market integrity.
