ED Cracks Down on Viresh Joshi for Alleged Front Running Scam

The Enforcement Directorate accused Viresh Joshi, former Axial Mutual Fund executive, of sharing market-sensitive information for kickbacks in a front-running scam. Investigations revealed significant financial improprieties involving overseas properties and shell companies. Joshi allegedly funneled illicit gains through Kolkata-based operators into various accounts, leveraging the funds for personal and business gains.

The Enforcement Directorate on Wednesday accused Viresh Joshi, ex-chief trader and fund manager of Axis Mutual Fund, of sharing market-sensitive information in exchange for kickbacks from brokers in Dubai, as part of a front-running scam.

The federal agency stated it conducted searches on September 9 in Mumbai and Kolkata under the Foreign Exchange Management Act (FEMA) probe related to Axis Mutual Fund.

Seized assets included foreign currencies worth Rs 12.96 lakh, incriminating documents concerning overseas properties and bank accounts, and digital devices.

The Income Tax Department had earlier raided Joshi in August 2022 for the same case.

The ED's action was based on an interim order from SEBI, alleging front-running activities by Joshi and others, netting wrongful gains of Rs 30.56 crore.

Front-running involves brokers or traders exploiting advance knowledge of pending orders to benefit personally, an unethical and illegal practice.

Joshi allegedly shared market-sensitive information for kickbacks and used Kolkata-based operators to route illicit cash through shell entities, which provided unsecured loans to Joshi and his affiliates.

These illegal gains funded purchases of UK properties and investments in overseas entities, with Rs 14 crore remitted abroad.

Entities like Vintage Capital Investment LLC in Dubai and Vincent Capital Holding Limited in the UK were reportedly created using these funds, housing illicit gains of Rs 12 crore.

Funds were also utilized to create fixed deposits and purchase properties in India, the ED claimed.

(With inputs from agencies.)