Sebi penalises two brokers and directors in Axis Mutual Fund case
The regulator imposed a total penalty of Rs 40 lakh for facilitating front-running trades involving Axis Mutual Fund.
The Securities and Exchange Board of India (Sebi) on Tuesday imposed a total penalty of Rs 40 lakh on two stockbroking firms and their directors for allegedly facilitating front-running trades involving Axis Mutual Fund, according to reports by The Economic Times and Moneycontrol.
The penalty of Rs 10 lakh each was imposed on Woodstock Broking Pvt Ltd, its director Suresh Kanmal Jajoo, Marfatia Stock Broking Pvt Ltd, and its managing director Nishil Surendra Marfatia.
The investigation, which covered the period from April 2021 to March 2022, found that the brokers provided access to trading terminals to an unauthorised person, Prijesh Kurani, based in Dubai. The regulator alleged the firms facilitated the installation and operation of ODIN trading software on systems used by Kurani via the remote access application AnyDesk.
The regulator found that Viresh Joshi, the then chief dealer at Axis Mutual Fund, allegedly shared information regarding the fund's impending trades with Kurani. Kurani then executed trades through multiple accounts ahead of the mutual fund's transactions.
Sebi stated that a registered stock broker is expected to exercise heightened care over terminal access and trading infrastructure. The regulator alleged the conduct of enabling terminal access to a third party outside the authorised framework violated the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations.
While four entities were penalised, the regulator disposed of adjudication proceedings against six other noticees without imposing any monetary penalty.