Police book ex-Axis MF manager in multi-crore front-running fraud

MUMBAI: Sion police have filed a case against ex-Axis Mutual Fund manager Viresh Joshi for a multi-crore front-running fraud involving insider trading.

MUMBAI: The Sion police have registered a case against Viresh Joshi, a former manager at Axis Mutual Fund, and others, in connection with the multi-crore ‘front-running’ fraud. The case has been transferred to the Economic Offences Wing (EOW) of the Mumbai police for further investigation.

Police book ex-Axis MF manager in multi-crore front-running fraud

Police said the accused had leaked insider information relating to Axis MF’s investment plans to stock brokers, and the brokers earned large sums using the information – a fraud known as ‘front running’ in the capital market. The offence took place between September 2021 and March 2022.

Joshi is also being investigated by the Enforcement Directorate and the Income Tax Department. The First Information Report (FIR) registered by the Sion police stated that Joshi had fixed deposits worth ₹54 crore, several flats in Mumbai valued at around ₹150 crore, and properties in London as well.

Police officials said the case was registered following an order issued by the metropolitan magistrate’s court in Kurla on a complaint lodged by an Axis MF investor named Soni Parmar, 51. “We have registered a case against Viresh Joshi, former chief fund dealer at Axis Mutual Fund, market operator Sumit Desai, Pranav Vora, who arranged trading accounts, Dubai-based Brijesh Kurani, and a certain Vaibhav Pandya,” said a police officer. The accused have been charged under the Indian Penal Code for cheating, forgery, criminal breach of trust, forgery for the purpose of cheating, criminal conspiracy, falsification of accounts and common intention, the police officer said.

According to the FIR, Joshi is accused of front-running, an illegal practice whereby individuals aware of upcoming large trades use the confidential information to buy up stocks beforehand and make handsome gains. The FIR alleged that through various phones and WhatsApp calls, Joshi allegedly passed on the information to various stockbrokers about proposed investments in specific shares.

It is also alleged that these brokers, upon receiving the insider information, influenced their clients into either buying shares or selling them to earn profits. They also diverted investments to various groups, violating various norms and cheating around 66 lakh investors and causing a financial loss of over ₹2.5 trillion.

The FIR added that the accused forged documents and even altered the share prices of some companies to cheat mutual fund investors. It added that Joshi had fixed deposits worth ₹54 crore, property in Mumbai valued at ₹150 crore, and flats in London.

Joshi was under the scanner of the Income Tax Department in August 2022, when it carried out a search-and-seizure operation at more than 25 premises across Mumbai, Ahmedabad, Vadodara, Bhuj and Kolkata, that covered the chief dealer, related stock brokers, middlemen and entry operators. More than 20 lockers were placed under restraint and unaccounted deposits exceeding ₹55 crore were seized during the raids.

The Enforcement Directorate (ED) had also carried out searches as part of its Foreign Exchange Management Act (FEMA) probe against Joshi, for alleged violation of forex rules.