The directorate of enforcement (ED) has arrested Viresh Gangaram Joshi, former chief dealer and fund manager of Axis Mutual Fund (Axis MF), in connection with a massive front-running scam that allegedly generated over Rs200 crore in illicit profits between 2018 and 2021. The arrest follows extensive search operations on 1st August and 2 August 2025 across multiple cities, including Delhi, Mumbai, Gurugram, Ludhiana, Ahmedabad, Bhavnagar, Bhuj and Kolkata, under the Prevention of Money Laundering Act (PMLA), 2002.
According to ED, Mr Joshi exploited confidential information about large trades to be executed on behalf of Axis MF, which manages assets of more than Rs2 lakh crore, to pre-emptively trade in the same scrips. This illegal practice, known as front-running, allowed him and others to make substantial wrongful gains at the cost of millions of investors.
The probe stems from a first information report (FIR) filed by the Mumbai police in December 2024, alleging that Mr Joshi, then a senior executive at Axis MF, executed the scheme using a trading terminal in Dubai and multiple ‘mule’ accounts obtained through various brokers. “In addition to Mr Joshi, several other traders and brokers misused advance information on Axis MF trades to generate illicit profits, which are nothing but proceeds of crime,” ED says.
During the searches, ED froze proceeds of crime in the form of shares, mutual funds, and bank balances worth Rs17.4 crore. Investigators say the actual figure of illicit gains could be much higher than the Rs200 crore identified so far. The agency alleged that the profits were routed through shell companies and bank accounts controlled by the accused, their family members, and associates.
Mr Joshi was produced before a competent court on 2nd August and has been remanded to ED custody until 8 August 2025 for further interrogation.
The investigation has also exposed a global money trail. Earlier ED probes under the Foreign Exchange Management Act (FEMA) linked Mr Joshi to two London properties and significant overseas investments. Documents revealed that Rs14 crore was remitted abroad to incorporate Vintage Capital Investment LLC in Dubai and Vincent Capital Holding Ltd in the UK. Searches also uncovered foreign currency worth Rs13 lakh and evidence of the misuse of investor funds.
Mr Joshi is alleged to have amassed real estate worth Rs150 crore in Mumbai, along with properties in London and fixed deposits of Rs54 crore.
The scam has also attracted judicial attention. Earlier this year, the Bombay High Court issued a notice to the central bureau of investigation (CBI) on a plea seeking transfer of the probe from the economic offences wing (EOW) of Mumbai police. The petition, filed by investor Soni Parmar, alleged that Mr Joshi and his associates used encrypted communication platforms like WhatsApp to share trading strategies with brokers, enabling them to manipulate stock prices for personal gain.
According to various media reports, investigators estimate the front-running operations may have impacted over 6.6mn (million) investors, causing financial harm amounting to Rs2.5 lakh crore in market value.
The Axis MF case underscores the urgent need for stricter oversight in India’s mutual fund sector. ED’s probe builds on interim findings by the Securities and Exchange Board of India (SEBI) which had earlier identified wrongful gains of Rs30.56 crore in the scheme.
The investigation into Mr Joshi’s network of brokers, shell companies, and international money transfers is ongoing. ED officials say more arrests and asset seizures are likely in the coming weeks.
The surveillance system in SEBI generated specific alerts indicating that trades by certain suspected entities executed from 1 September 2021 to 31 March 2022 appeared to have been not executed in the ordinary course of trading and were apparently in the nature of trades that were executed for front-running the trades of Axis MF.
SEBI initiated multiple investigations against entities and the trading members suspected in the front-running. It also conducted search and seizure operations.
SEBI's investigation revealed that 25 trading members through which Axis MF placed its orders were diversified. "The fact that there were numerous trading members through which Axis MF was placing its orders, it was suspected that the leakage of information about the impending orders of Axis MF was possibly done at the end of Axis MF."
"During the course of the investigation, it was noted that noticees connected to Mr Joshi, the then chief dealer of Axis MF, were observed to have traded in different securities ahead of the impending orders placed on behalf of Axis MF. Subsequently, soon after Axis MF's orders were placed, these connected noticees squared off their earlier trade positions taken on the exchange platform. In the process, substantial proceeds of profit were generated in the trading accounts of these connected noticees, by placing orders ahead of and in anticipation of the price movement of scrips in a certain direction on account of the impending large buy or sell orders of Axis MF."
"The trades that were executed to front run the trades of Axis MF in the aforesaid manner from the trading accounts of the connected noticees were done in a similar manner on numerous occasions during the investigation period," SEBI's investigation revealed.
According to SEBI, trading accounts used for the front-running were arranged by Sumit Desai, a market operator at the behest of Mr Joshi. Mr Desai also introduced Dubai-based Prijesh Kurani to Mr Joshi. Mr Kurani was entrusted with the task of placing orders for front-running the trades of Axis MF in the trading accounts to connected noticees, arranged by Mr Desai, under instruction from Mr Joshi, it added.
"...on a preponderance of probability basis, it can be prima facie, strongly inferred that Mr Joshi had passed on or leaked the confidential non-public information regarding the impending orders of the big client (Axis MF) to individuals other than for whom the said information was intended for, i.e., other than the empanelled stock brokers of Axis MF," SEBI says.
Despite these revelations, SEBI clarified that the operations of Axis Mutual Fund as an institution remain unaffected.
In 2022, multiple agencies intensified their investigations into Mr Joshi's activities. The income-tax (I-T) department conducted raids across Mumbai, Ahmedabad, Vadodara, Bhuj, and Kolkata, unearthing unaccounted deposits exceeding Rs55 crore. Over 20 lockers linked to Mr Joshi were frozen. The ED's parallel investigation revealed Mr Joshi's methods of transferring illicit gains abroad, while SEBI barred him and 20 associates from accessing capital markets.
The Axis Mutual Fund front-running scandal has exposed systemic vulnerabilities in India's financial markets. With investigations continuing across multiple agencies, including SEBI, ED, and the I-T department, the case serves as a stark reminder of the importance of stringent market regulations and transparent practices to safeguard the interests of investors.
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