Axis Mutual Fund: The Enforcement Directorate (ED) said on Sunday that it has arrested former Chief Treder and Senior Fund Manager of Axis Mutual Fund, Viresh Joshi in a 200 crore front-hanging scam. Joshi was detained on August 3 and a special court has sent him to the ED custody by 8 August under the Money Laundering Prevention Act (PMLA).
What is front-hanging?
The front-hanging is considered a serious crime in the market. In this, traders or brokers already get confidential information of big deals by an institution. Then using that information, they deal for themselves. Its purpose is to earn a profit before that institutional deal, causing damage to the related client and inequality in the market. It is clearly restricted and punishable according to SEBI rules.
According to the ED, Joshi used prior information of purchase and selling deals within Axis Mutual Fund for personal advantage and also benefited other traders. The agency claims that this cheated investors and affected the fairness of the market.
Raids across the country
The ED conducted raids in several cities of the country from 1 August, including Delhi, Mumbai, Gurugram, Ludhiana, Ahmedabad, Bhavnagar, Bhuj and Kolkata. During the raids, the agency received a complex network of brokers, mule accounts and shell companies used in front-ringing.
The ED said that in this action, a total of Rs 17.4 crore movable and immovable properties have been freezed, including deposits in shares, mutual fund units and bank accounts. These properties are considered part of the illegal earnings from this scam.
How to rotate money
The investigating agency claims that Joshi and its colleagues rooted the illegal earnings from this front-well through Shell companies, relatives’ bank accounts and abroad. Especially, through a Dubai -based trading terminal. Several mule accounts were also collected from brokers, which were used to make private transactions before official deals with Axis Mutual Fund.
According to the ED, this illegal earnings may be more than the initial estimate, which is currently being estimated above Rs 200 crore.
Scam between 2018-2021
The current action of the ED is based on an FIR registered by Mumbai Police in December 2024. Apart from this, in 2022, the Income Tax Department also investigated deals related to Joshi. The ED was then investigating the matter under the Foreign Exchange Management Act (FEMA), but now it has been registered under money laundering.
Joshi was removed in 2022
Axis Mutual Fund was included in the country’s major fund house during the scam and its AUM (asset under management) was more than ₹ 2 lakh crore. Joshi was removed in May 2022 when the Fund House itself started an internal review of its trading activities.
According to the news agency PTI, the ED has found such evidence that many other traders and brokers also got the benefit of this internal information. This indicates this scam to an organized connivance.
And arrests possible
The agency has clarified that this is just the initial action and there may be further arrests. The ED is now investigating how many people, institutions and trading platforms were involved in this network and whether any regulator was misled by their connivance.
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