Blog

What is the AXIS Mutual Fund Front-Running Scam?

Axis Mutual Fund is one of the largest mutual fund houses in India, in which crores of Indians invest. However, in 2025, a huge financial scam in this fund left many people sleepless. This scam, known as ‘front-running,’ has severely damaged the trust of investors. In this blog, we will take a detailed, simple look at what exactly happened in this case, how the fraud took place, how the government and regulators took action, and what exactly we can learn from all this.

What is front-running?

Front-running is a very serious type of financial fraud. It involves mutual fund companies or their employees/traders, directly or indirectly, making large purchases or sales of the companies' stocks or assets in advance of their own or related accounts. In other words, if you use insider knowledge to buy or sell stocks in your account before the rest of the market knows about it, the profit from it is considered wrongful and illegal.

What exactly happened in this case?

Between 2018 and 2021, Viresh Gangaram Joshi, former fund manager of  Axis Mutual Fund, used important confidential information within the organisation. This information meant that Joshi knew in advance which shares the fund was going to buy or sell in large quantities. He shared this information with colleagues or other special people. Then, this group would buy or sell shares in large quantities in advance through different accounts (called ‘mule accounts’). Therefore, as soon as the fund’s large order entered the market, the price of those shares would fluctuate, and the accounts financed by Joshi would generate substantial profits.

What are the laws and regulations applicable to the Front Running scandal?

In India, there are strict regulations from the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India ( RBI)  regarding mutual funds and other important investment instruments. According to the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Rules 2003, any kind of misuse of inside or confidential information, or market fraud, is a crime. Various provisions of the Prevention of Money Laundering Act (PMLA) and the Foreign Exchange Management Act (FEMA) have been used here.

Major action by the government and ED:

In 2022, the Income Tax Department investigated the matter. In 2024, the Mumbai Police filed an FIR and started the investigation. SEBI banned the accused by issuing a temporary order in February 2023. In August 2025, the Enforcement Directorate (ED) took major action and investigated the financial transactions of Joshi and several other individuals, shell companies, mule accounts, and trading terminals in Dubai. Major raids were conducted across the country in Delhi, Mumbai, Gurugram, Ahmedabad, Ludhiana, Bhavnagar, Bhuj, and Kolkata. Authorities have frozen assets worth approximately ₹17.4 crore, including shares, mutual funds, bank balances, and other unfairly collected funds.

Impact of this scam on investors and the market:

The direct play with the money of several lakhs of investors has shaken their confidence in the market. This case has made it clear that mutual fund institutions, brokers, and distributors should all discharge their responsibilities more honestly. Both transparency and ethical dealings in the market are very important.

Axis Mutual Fund's response:

Axis has cooperated with the investigation and said that all these cases are related to a former employee. The fund has assured that investors have no reason to fear; the day-to-day operations of the institution and investments are safe.