Mumbai, 4 November: Capital markets regulator Securities and Exchange Board of India (SEBI) has imposed a total penalty of ₹40 lakh on four entities, including two stockbroking firms and their directors, for their alleged role in facilitating front-running trades linked to Axis Mutual Fund.
The regulator imposed a fine of ₹10 lakh each on Woodstock Broking, its director Suresh Kanmal Jajoo, Marfatia Stock Broking and its director Nishil Surendra Marfatia.
Trading Investigation
The action follows an investigation into suspicious trading activities involving Axis Mutual Fund, identified as the big client in the case.
SEBI initiated its investigation after its surveillance system flagged transactions that appeared to involve front-running, a practice in which traders use advance knowledge of large orders to gain an unfair advantage.
The investigation covered transactions between April 1, 2021, and March 31, 2022.
Dubai Connection
According to SEBI’s order, the two stockbroking firms facilitated the installation and operation of ODIN trading terminals on a computer system used by Prijesh Kurani in Dubai.
Kurani was neither an authorised person nor a registered dealer associated with either brokerage.
The regulator found that the brokers provided trading infrastructure and technical assistance that enabled the execution of the transactions under investigation.
Digital Evidence
In Woodstock Broking’s case, SEBI examined WhatsApp messages, internet protocol (IP) addresses, MAC IDs and evidence relating to remote access through AnyDesk software.
The regulator also examined the involvement of the brokerage’s IT personnel in enabling access to trading systems.
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SEBI noted that Visa Capital Partners, whose trading account featured in the alleged arrangement, maintained an account with Woodstock Broking. Jajoo was also a partner in the firm.
Regulatory Violations
For Marfatia Stock Broking, SEBI relied on statements, WhatsApp conversations involving IT personnel and common MAC IDs connecting trading systems operated through both brokers.
The regulator concluded that the firms and their directors facilitated fraudulent trading activities, violating regulations governing fraudulent and unfair trade practices in securities markets.
All four entities have been directed to pay their respective penalties within 45 days of receiving the order.
Disclaimer: This report is based on SEBI’s regulatory order and is intended solely for informational purposes, not investment or legal advice.
