The Enforcement Directorate (ED) has arrested Viresh Gangaram Joshi, the former Chief Dealer and fund manager of Axis Mutual Fund, in connection with a massive front-running scam estimated to involve illicit gains exceeding Rs 200 crore. Joshi was apprehended on August 2, 2025, and a special court has remanded him to ED custody until August 8 under the Prevention of Money Laundering Act (PMLA). This arrest is the latest development in a complex investigation into fraudulent trading activities that allegedly undermined the integrity of India’s securities market and cheated investors of one of the country’s largest mutual funds managing assets of over Rs 2 lakh crore.
The Front-Running Scheme and Its Impact on Investors:
Front-running is an illegal and unethical trading practice in which brokers or traders use confidential advance knowledge of large client order executions to place their own trades ahead of these orders, profiting at the expense of the client and other market participants. In this case, Joshi allegedly exploited his insider access to confidential trade information of Axis Mutual Fund between 2018 and 2021. Using this privileged data, he executed preemptive trades through multiple mule accounts sourced from various brokers, including a trading terminal located in Dubai.
This sophisticated scheme distorted the fair market by allowing Joshi and co-conspirators to generate significant illicit profits, while retail and institutional investors of Axis Mutual Fund suffered losses. The ED investigation revealed a network of shell entities and bank accounts used to route proceeds from these fraudulent trades. So far, the agency has identified over Rs 200 crore in illegally earned funds, a figure which may be much higher as the probe continues.
Nationwide Raids and Asset Freezes by the ED:
As part of its crackdown, the Enforcement Directorate conducted extensive search operations starting August 1 across multiple cities including Delhi, Mumbai, Gurugram, Ludhiana, Ahmedabad, Bhavnagar, Bhuj, and Kolkata. These raids uncovered evidence of elaborate front-running activities and led to the freezing of assets worth Rs 17.4 crore. The frozen assets include shares, mutual fund units, bank balances, and other financial instruments linked to the accused individuals.
The probe follows a First Information Report (FIR) registered by Mumbai Police in December 2024, which triggered the ED’s layered investigation under the anti-money laundering framework. Earlier, the Income Tax Department had also conducted searches in relation to this case in 2022, indicating the long-running nature of the probe into illicit gains through market manipulation involving Axis Mutual Fund trades.
Ongoing Investigation and Wider Market Implications:
The arrest of Viresh Joshi marks a critical milestone but not the end of the investigation. The ED is continuing to scrutinize other brokers and traders who allegedly misused confidential trade information to engage in front-running activities. These participants are also suspected of generating proceeds considered criminal under PMLA, and further arrests or asset freezes may follow.
This case brings into sharp focus the pressing need for stronger surveillance and regulatory safeguards in India’s mutual fund and securities market environment. Front-running not only undermines market confidence but inflicts direct harm on investors by eroding the fairness essential to a healthy capital market.
Regulators and market players will keep a close eye on the investigation to look for lessons learned and changes meant to stop similar fraudulent schemes. The front-running controversy at Axis Mutual Fund serves as a stark reminder of the weaknesses in trading platforms and the vital role that ethics and transparency play in safeguarding the interests of investors.
