ED conducts raid on Ex-Fund Manager Viresh Joshi in Axis Mutual Fund Front Running Case

The Enforcement Directorate (ED) is conducting raids on the premises of Viresh Joshi, the former chief trader and fund manager of Axis Mutual Fund (MF), in connection with a forex violation case.

According to sources, the agency has filed a FEMA case against Joshi. Joshi was not immediately available to remark.

In July 2022, the Mumbai investigative wing of the IT department conducted searches on more than 25 Joshi-related premises in Mumbai, Ahmedabad, Vadodara, Bhuj, and Kolkata. The department even asked about the brokers and middlemen involved in the case. Sebi, too, conducted search and seizure operations across the country, seizing electronic devices from suspects.

The IT action was based on information provided by Sebi. The income tax department then attached Rs.57 crore in fixed deposits held by Joshi, claiming the funds were the purported profits of unlawful trades.

The asset management company fired Joshi in May 2022 after allegations of front-running and broker payments arose.

Front-running is the trading of stocks or other financial assets by a broker who has inside knowledge of a forthcoming transaction that will have a significant impact on the price.

The Axis Mutual Fund investigation discovered that Joshi would inform the broker about the shares Axis was planning to purchase in bulk. After the broker purchased the shares, the fund house would purchase it from him at a higher price. As part of the agreement, Joshi got payments from brokers.

These sources also stated that, as required, the trade information was not reflected on the stock markets. This allowed anyone to use such information for ‘illicit gains’ in the stock market by trading in such scrips on their own or their client’s accounts, according to a source.