ED Seizes Rs 12.96 Lakh in Foreign Currencies in Axis Mutual Fund Probe
The Enforcement Directorate (ED) has seized properties in the form of foreign currencies amounting to Rs 12.96 lakh during multiple searches conducted under the Foreign Exchange Management Act (FEMA), 1999. These searches took place at various locations in Mumbai and Kolkata as part of an ongoing investigation into a front-running business involving Axis Mutual Fund.
According to the ED, various documents related to overseas immovable properties, overseas bank accounts, and digital devices were also seized by ED’s Mumbai Zonal office during the search operations on September 9. The investigation was initiated based on an interim order passed by the Securities and Exchange Board of India (SEBI).
Allegations of front-running were made against Viresh Joshi, a former fund manager at Axis Mutual Fund, and others for earning wrongful gains of approximately Rs 30.56 crore. Front running is an unethical and illegal practice in the securities market where a broker or trader executes orders on a security for their account while taking advantage of advanced knowledge of pending orders from their customers.
The ED stated that evidence has been found revealing the modus operandi in the front-running scam. Viresh Joshi allegedly shared market-sensitive information in return for kickbacks from brokers in Dubai who could execute trades on his instructions. He also contacted other individuals and entities in India to lend their trading accounts on a rental basis.
The illicit gains generated through these trades were received by Viresh Joshi in cash from the brokers. Joshi allegedly used Kolkata-based operators to route the cash into the bank accounts of multiple shell entities, which then provided unsecured loans to him, his family members, and their firms.
Preliminary investigations revealed that the illegal gains from front running were used to purchase immovable properties in the UK. Documents related to two such properties, for which Rs 14 crore was remitted abroad, have been found. It was also discovered that overseas entities, namely Vintage Capital Investment LLC in Dubai and Vincent Capital Holding Limited in the UK, were incorporated with these funds, and illegitimate gains of Rs 12 crore were parked in those accounts. Additionally, funds were used to form Fixed Deposits and buy properties in India.
Doubts Revealed
ED -: ED stands for Enforcement Directorate. It is a government agency in India that investigates financial crimes like money laundering and foreign exchange violations.
Rs 12.96 Lakh -: Rs 12.96 Lakh means 1,296,000 Indian Rupees. In India, ‘Lakh’ is a term used to denote 100,000.
Foreign Currencies -: Foreign currencies are money from other countries, like US Dollars or Euros, which are different from Indian Rupees.
Axis Mutual Fund -: Axis Mutual Fund is a company in India that manages investments for people, helping them grow their money by investing in stocks, bonds, and other assets.
Foreign Exchange Management Act -: The Foreign Exchange Management Act (FEMA) is a law in India that regulates foreign exchange transactions to ensure the country’s economic stability.
SEBI -: SEBI stands for Securities and Exchange Board of India. It is a government body that regulates the stock market and protects investors.
Viresh Joshi -: Viresh Joshi is a person who used to work as a manager at Axis Mutual Fund. He is being investigated for doing something wrong with money and investments.
Front-running -: Front-running is an illegal practice where someone uses secret information to make trades before others, to make extra money unfairly.
Kickbacks -: Kickbacks are illegal payments made in return for a favor or service, often secretly and unethically.
Kolkata-based operators -: Kolkata-based operators are people or groups in Kolkata who helped Viresh Joshi with his illegal activities.
UK -: UK stands for the United Kingdom, a country in Europe that includes England, Scotland, Wales, and Northern Ireland.
Overseas entities -: Overseas entities are companies or organizations that are based in other countries, not in India.