ED raids in Mumbai and Kolkata reveal Axis Mutual Fund front-running scam
ED conducts raids across Mumbai and Kolkata on September 9 in an ongoing investigation into the front-running scheme at Axis Mutual Fund. The searches under FEMA, 1999, led to seizure of assets, foreign currencies worth Rs 12.96 lakh comprising GBP, Euro, AED, digital devices, and incriminating documents related to overseas properties.
The investigation was initiated following an interim order from the Securities and Exchange Board of India in the case of allegations against Viresh Joshi and others regarding running a front running scam, wherein the broker or trader indulges in a trade with the insider information about his customer’s orders to get undue benefits. According to SEBI, wrongful gains from the scheme were approximately Rs 30.56 crore.
Investigations by ED have brought to the fore that Joshi used to leak sensitive market information to brokers based in Dubai and received kickbacks. He hired trading accounts from operatives based in India to execute his fraudulent scheme. The gains from those trading transactions were diverted through Kolkata-based operators to several shell companies that issued unsecured loans to Joshi, his family members, and his firms.
Further investigations uncovered the fact that properties in the United Kingdom had been purchased with the proceeds of crime, and documents revealed that two such properties valued at Rs 14 crore had been purchased with these funds. The overseas entities involved in the scheme included Vintage Capital Investment LLC, Dubai, and Vincent Capital Holding Limited, UK, where Rs 12 crore had been parked. Apart from that, some of the ill-gotten gains were invested in buying properties and making fixed deposits within the country.
ED continuously investigates to bring out the complete extent of the financial activities that have taken place behind this front-running operation.
