Sebi imposes Rs 40 lakh penalty on two brokers in Axis Mutual Fund front-running case

Mumbai: The Securities and Exchange Board of India (Sebi) on Tuesday imposed a total penalty of ₹40 lakh on two stockbroking firms - Woodstock Broking and Marfatia Stock Broking - and their directors for facilitating front-running trades involving Axis Mutual Fund by providing access to their trading terminals to an unauthorised person based in Dubai.

The regulator imposed a penalty of ₹10 lakh each on Woodstock Broking, its director Suresh Kanmal Jajoo, Marfatia Stock Broking and its managing director Nishil Surendra Marfatia.

The regulator found that the two brokers had facilitated the installation and operation of their ODIN trading software on computer systems used by Prijesh Kurani, who executed the alleged front running trades from Dubai. The software was installed using AnyDesk, a remote access application.

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"A Sebi-registered stock broker is expected to exercise heightened care and control over its terminal access, user chain and trading infrastructure. Permitting/enabling terminal access to be used by a third party outside the authorised framework...is conduct that squarely falls within PFUTP Regulations," Sebi said in its order.

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The investigation, covering April 2021 to March 2022, found that Viresh Joshi, then chief dealer at Axis Mutual Fund, allegedly shared information about the fund's impending trades with Kurani, who executed trades through multiple accounts ahead of the mutual fund's transactions. Sebi found that Marfatia's IT employee Yunus Modan had facilitated the installation of ODIN on Kurani's system.
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