The Enforcement Directorate (ED) has arrested Viresh Joshi, a former fund manager at Axis Mutual Fund (MF), on charges of money laundering related to alleged front-running activities. The arrest follows an extensive investigation into allegations that Joshi exploited confidential information about Axis Mutual Fund's impending trades to illicitly profit by trading stocks in advance of the fund's transactions.

The ED's investigation stems from a First Information Report (FIR) filed by the Mumbai Police in December 2024. The FIR alleged that Joshi misused his position to access sensitive information regarding Axis Mutual Fund's trading activities. It is alleged that between 2018 and 2021, Joshi engaged in front-running, an illegal practice where a trader uses advance knowledge of a large transaction to take positions that will profit from the subsequent price movement caused by the larger order. By trading ahead of Axis Mutual Fund's orders, Joshi allegedly generated substantial illegal gains, effectively cheating the investors of Axis Mutual Fund, which manages assets worth over ₹2 lakh crore.

Following the FIR, the ED initiated a probe under the Prevention of Money Laundering Act (PMLA). The ED conducted searches in multiple cities, including Delhi, Ahmedabad, Bhavnagar, Bhuj, Gurugram, Kolkata, and Ludhiana, to gather evidence related to the alleged money laundering activities. These searches aimed to uncover the network of individuals and entities involved in the front-running scheme and to trace the flow of illicit funds.

The ED suspects that Joshi utilized a trading terminal in Dubai to execute front-running trades through various "mule" trading accounts obtained from brokers. The agency also believes that the illicit profits were funneled through numerous shell companies and bank accounts beneficially owned by the accused individuals, their families, and related entities. The ED has already frozen assets worth ₹17.4 crore as part of its investigation, indicating the scale of the alleged financial irregularities.

Joshi has reportedly told the investigating agencies that numerous other traders and brokers also misused advance information on Axis Mutual Fund trades and engaged in front-running to generate illegal trade profits. These profits, according to the ED, constitute proceeds of crime, and the agency is working to identify all individuals involved and to recover the ill-gotten gains.

Front-running is considered a serious offense in the securities market because it compromises market integrity and disadvantages other investors. By exploiting confidential information and trading ahead of their clients, individuals like Joshi can manipulate market prices and profit at the expense of ordinary investors who lack access to such privileged information. The ED's action against Joshi underscores the agency's commitment to cracking down on market malpractices and protecting investor interests.