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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, at various locations in Mumbai and Kolkata as part of an ongoing probe in the case of front-running business in respect of Axis Mutual Fund, the Directorate confirmed on Wednesday.
According to ED, various documents pertaining 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 Directorate has initiated an investigation on the basis of an interim order passed by the Securities and Exchange Board of India (SEBI). Allegations of front-running business were levelled against Viresh Joshi, former fund manager at Axis Mutual Fund, and others for earning wrongful gains of approximately Rs 30.56 crore. Front running is a term used in the securities market to describe a practice 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. This practice is considered unethical and illegal, as it undermines the integrity of the market and causes disadvantages to other investors. The agency said that evidence has been found that unravels the modus identified in the front-running scam. "In this case, Viresh Joshi was allegedly sharing market-sensitive information in return for kickbacks from brokers having terminal in Dubai who could execute trade on his instructions. He also contacted a few other individuals and entities based in India who could lend their trading accounts on a rental basis," said the ED. The agency added further, "The illicit gains generated through the said trade were received by Viresh Joshi in cash from the said brokers." ED said further that Joshi allegedly used Kolkata-based operators to route the cash in the bank accounts of multiple shell entities, which in turn gave unsecured loans to him, his family members, and the firms beneficially owned by them. "Preliminary investigations revealed that the said illegal gains made from front running was utilized for the purchase of immovable properties in UK. Documents related to two such properties have been found for which an amount of Rs 14 crore was remitted abroad," the agency said. It is also found that overseas entities, namely Vintage Capital Investment LLC in Dubai and Vincent Capital Holding Limited in the UK, were allegedly incorporated with these funds, and illegitimate gains to the tune of Rs 12 crore were parked in those accounts. "Funds were also used to form Fixed Deposits and buy properties in India," added the ED. (ANI)
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