ED Arrests Former Axis MF Manager in Front-Running Probe

Fast Summary

• Viresh Joshi, former chief trader and fund manager at Axis Mutual Fund, arrested under the Prevention of Money Laundering Act (PMLA) on charges linked to investor cheating worth ₹200 crore through alleged “front-running” activities.
• Front-running is an illegal malpractice where traders exploit advance knowledge of client orders for personal gain, undermining market integrity.
• A PMLA court sent Joshi to Enforcement Directorate (ED) custody until August 8; he was arrested on August 3 following searches conducted across several cities.
• ED revealed that Joshi allegedly used confidential information from axis Mutual Fund trades between 2018-2021 for illicit profits. Trades were executed using “mule trading accounts” via a Dubai terminal.
• Investigation indicates involvement of several traders and brokers who generated more than ₹200 crore in proceeds through front-running activities. Funds may exceed this amount.
• The illicit gains were reportedly laundered through shell entities and accounts owned by accused individuals and their families.
• The ED froze assets worth ₹17.4 crore during the raids, including shares, mutual funds, and bank balances.

Indian Opinion Analysis

The arrest of Viresh Joshi underscores critical vulnerabilities within IndiaS financial trading ecosystem related to transparency and ethical conduct. Front-running not only marks a betrayal of investor trust but directly challenges regulatory safeguards aimed at ensuring fair practices in markets handling billions in assets under management-Axis Mutual Fund alone commands over ₹2 lakh crore.

This case also highlights growing reliance on cross-border mechanisms like Dubai terminals for illicit trade execution, underscoring the need for strengthened international collaboration against such practices.Moreover, systemic issues such as shell entities used for laundering profits point to structural gaps that investigations must address comprehensively.

India’s financial regulators face mounting pressure to ensure stricter compliance measures across mutual funds and brokerage firms while fostering greater accountability among fund managers entrusted with significant public investments. The freeze on assets is a positive step toward restitution; though, sustained vigilance will be essential in rebuilding trust across India’s mutual fund industry.

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