Mumbai special PMLA Court Rejects Bail Plea Of Ex-Axis Mutual Fund Manager Viresh Joshi In ₹91 Crore Front Trading Case

Mumbai: The special PMLA court has rejected bail plea of Viresh Joshi, former fund manager of Axis Mutual Fund, arrested by the Enforcement Directorate (ED) over allegations of earning Rs 91 crore through front trading, an illegal market manipulation practice.

Judge’s Observation on SEBI Compliance

The special judge RB Rote, has while refusing to grant bail observed that merely because the other accused in case, complied with the order of SEBI and deposited an amount of Rs 30 crores, which said to be proceeds of crime earned through front trading, with the board, it does not mean that Joshi is absolved from the allegations of money laundering.

ED’s Allegations of Money Laundering

Joshi was arrested by ED over the allegations of money laundering to the tune of Rs 91 crores, earned allegedly by way of ‘front trading’ He had moved a bail plea through his lawyer Manan Sanghi claiming that the alleged amount which is said to have been gained by Joshi through front running, has already been recovered by the authorities. The plea was objected by ED prosecutor Arvind Aghav.

Confidential Information Misuse

According to the agency, he was working as the chief dealer of Axis mutual fund and had access to confidential information regarding the mutual fund’s schemes and policies. However, it is alleged that he violated this trust by sharing sensitive information, causing severe financial losses to numerous investors.

SEBI’s Findings and Orders

It was pointed out that SEBI had concluded that Joshi while working as chief dealer of Axis Mutual Fund was entrusted with confidential information regarding the Mutual Fund's Scheme and its impending orders entered into a criminal conspiracy with Prijesh Kurani, Sumit Desai, Pranav Vora and was discretely passing the confidential information to those persons.

Impounding of Wrongful Gains

SEBI ordered impounding of Rs 30.56 crores being the wrongful gains through front-running activities in the hands of 9 entities and prohibited such entities from the Securities market. Most of the said amount of Rs 30.56 crores have been deposited by the respective other persons with SEBI but Joshi has not deposited any amount with SEBI.

ED’s Case on Fund Transfers

The agency however, has claimed that on the basis of the information shared by Joshi, front running was done and profits were generated. Joshi’s friend Sumit Desai used to collect Joshi’s share of profit and pass it to him.

ED claimed that it is revealed that a huge amount of funds to the tune of Rs 91 crores approximately have been received from various unknown entities/individuals in various bank accounts of the family members of the applicant. It is found that certain individuals are involved in a systematic scheme to launder the illicit proceeds collected via multiple channels.

Applicant’s Defence

Joshi had claimed that The Income-Tax Department had seized the fixed deposits on 01.08.2024 amounting to Rs 56.98 Crore from M/s. Vibgyor Capital Holding Pvt. Ltd., which is a company formed by Vipul Joshi (Viresh’s brother ) and Gangaram Joshi.

Further, he claimed that ‘disgorgement of the ill-gotten gains of Rs 30.56 Crore as directed by SEBI has already been done by the other noticees (accused) thereunder. The applicant has co-operated with the investigation by the EOW, Mumbai. He has not committed any offence.’

Court’s Final Ruling

The court after hearing both the sides said, “There are serious allegations of misappropriation of the amount of the investors to the tune of Rs.91 Crores. According to ED, the exact proceeds of crime will be quantified after the investigation in the matter.”

Standalone Nature of Offence

“Merely because as per the orders of the SEBI, the other noticees have deposited the amount Rs.30.56 Crores, it does not mean that the applicant is absolved from the offence of money laundering. The offence of money laundering is a distinct and standalone offence.

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Considering the record of the case, it shows that the ED has collected sufficient material to prima-facie show that the applicant has committed an offence of money laundering,” the special court said while rejecting Joshi’s bail plea.