Table of Contents
Introduction
Have you ever trusted someone with your money and found out they used it to buy a car for themselves? That’s what happened at Axis Mutual Fund — ₹30 crore of investor money was used for personal gain. The assigned dealer used investor money for generating illegal profits through a Stock Market Scam.
In this post, we’ll break down the Axis Mutual Fund Insider Trading Fraud, explain what really happened, and help you understand how such Capital Markets Frauds affect everyday investors like you and me.
What Is a Mutual Fund?
Mutual funds are a pool of money collected from individual investors (people like you and me). A fund manager then uses that money to buy and sell stocks, bonds, or other investments to help grow your wealth.
The idea is simple: You trust them to invest your money wisely and fairly. But what if someone on the inside decides to misuse that trust?
What Is Insider Trading and Front Running?
Insider Trading happens when someone uses secret information — not available to the public — to make money from buying or selling stocks. It’s unfair and illegal because not everyone gets the same chance to make profits.
Front Running is a type of insider trading. Let’s say a fund is about to buy a huge number of shares, which will likely push up the stock price. A dealer who knows this in advance buys the stock before the fund does and sells it when the price rises.
The Axis Mutual Fund Scam: What Happened?
During the COVID-19 lockdown, many stock market professionals started working from home. Axis Mutual Fund — one of India’s biggest fund houses — allowed its dealers to use special trading software (called Bloomberg Terminals) remotely. But what started as a flexibility measure became the blind spot that scammers exploited.
“Where surveillance ends, manipulation begins”.
One of those dealers was “Veeresh Joshi”, the chief dealer.
He saw every trade — before it hit the market. Buy or sell, small or large — he knew what Axis would do and when.
His job was to only place trades on behalf of Axis Mutual Fund. Instead, he used his insider knowledge to cheat the system and make personal profits through Front Running.
Covert Trading Network: Who Were Involved?
Veeresh Joshi didn’t work alone. He built a secret network of people that included:
- Sumit Desai (aka Pintu Bhai): An old friend with market knowledge.
- Pranav Vora: An expert in making fake (proxy) trading accounts.
- Brijesh Kurani: Managed trading from Dubai
- Family members and offshore companies to hide the money trail
They created a spider web of fake accounts and set up Bloomberg terminals outside India to avoid being caught.
How Did the Scam Work?
Each day, Joshi planned multi-crore trades for Axis Mutual Funds. But before those trades went live, he would call his team using untraceable personal phones.
Let’s walk through a real example of the scam in action — one involving Gland Pharma stock.
Here how it goes:
Joshi knows Axis MF will buy 2.8 lakh shares of Gland Pharma at 3 PM.
Step 1: At 2:39 PM, he contacts one of his fake account handlers to buy 20,000 shares of Gland Pharma at ₹3,625.
Step 2: At 2:52 PM, the fake account handler executes the trade at ₹3,630.
Step 3: At 2:56 PM, Joshi calls HDFC to place Axis MF’s order of 2.8 lakh shares.
Step 4: At 3:00 PM, the stock price jumps to ₹3,645 due to the Axis MF’s large order.
Step 5: The scammer account sells the stocks and makes ₹15 per share — with almost zero risk.
Multiply this across hundreds of trades, and the gang made ₹30 crore in illegal profits.
This is a textbook Stock Market Fraud.
It wasn’t just one account — it was a network:
- Marfatia Group: ₹9.5 Crores via Bhavin Shah’s account (often misused).
- Vista Capital: ₹14 Crores through multiple proxy trading accounts.
- Kurani Group: ₹7 Crores via family accounts (Dharini, Rekha), operated from Dubai.
All funds were routed via a shell company in Dubai and finally landed in offshore accounts controlled by Joshi’s family.
The Moment of Truth: How the Scam Was Caught?
The fraud might have gone unnoticed, but then something unexpected happened.
- Bhavin Shah, a person whose account was being used without permission, saw suspicious trades in his name.
- On January 19, 2022, he emailed a complaint to SEBI.
- Ironically, he also cc’d (copied) the main scammer, Veeresh Joshi, in the email.
- That email triggered an internal audit at Axis, and the web started to unravel.
SEBI's Investigation and Actions
SEBI started a full-blown forensic investigation. They checked time-stamped trades, IP addresses, WhatsApp chats, phone call records, terminal access logs, etc.
What they found was shocking?
90 front-running trades adding up to ₹30.5 crore in profits.
In February 2023, SEBI barred 20 individuals from the stock market, including Joshi and his team. It was one of the biggest mutual fund-related actions SEBI has ever taken.
This was a powerful response to a serious Mutual Funds Scam.
Why Does This Stock Market Scam Matters to Every Investor?
You might wonder: “This sounds like big finance stuff. Why should I care?”
Front-running isn’t just a white-collar crime — it’s a betrayal of trust.
Here’s why:
- The mutual fund paid more than it should have.
- People who invested in Axis Mutual Fund got their returns eaten up by fraudsters.
- The illegal profits they made should have been your returns.
This kind of Capital Markets Fraud affects everyone, not just rich people or big institutions.
SEBI’s crackdown sent a clear message, that even in a pandemic, even behind laptops — surveillance watches.
Conclusion: Lessons We Can Learn
The Axis Mutual Fund Insider Trading Fraud teaches us several important lessons:
- Trust is valuable — and must be protected with strong systems and audits.
- Technology helps, but only when combined with transparency.
- SEBI is watching, and wrongdoers can and will be caught.
- As investors, we must stay aware, informed, and alert.
This scam wasn’t powered by hacking or brute force.
It was powered by access, greed, and timing — and the misplaced trust in those meant to protect your money.
In India’s growing financial markets, front-running remains one of the most dangerous breaches — because it’s invisible, hard to detect, and hits you where it hurts most: your wealth.
In the end, the most dangerous Stock Market Scams aren’t loud. They’re silent, well planned, and hide under layers of trust. That’s why understanding how things work — even at a simple level — can protect your money.
Reference Source: The SEBI interim order, dated February 2023, sheds light on the modus operandi of the alleged front-running activities within Axis Mutual Fund, detailing the individuals involved and the preliminary findings of the regulator.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions
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