SEBI orders penalty for Pace Stock Broking over Axis Mutual Fund front-running

Who it concerns: Pace Stock Broking Services Private Limited (the Noticee); Mr. Kaleeswaran Pandian (dealer); Mr. Rajeev Ranjan (trader); Axis Mutual Fund (affected entity).

What SEBI found or ordered

• SEBI investigated trades from April 1, 2020, to March 31, 2022, for suspected front-running of Axis Mutual Fund.
• SEBI alleged violations of SEBI (Stock Brokers) Regulations, 1992, and the SEBI Circular dated November 06, 2013, regarding the maintenance of IP addresses and user ID mappings.
• SEBI noted that Pace could not provide IP addresses mapped to specific user IDs for the trades in question.
• SEBI analyzed trades executed under a specific CTCL ID, noting a discrepancy where Mr. Kaleeswaran Pandian was listed as the approved person in exchange records, while Pace claimed Mr. Rajeev Ranjan operated the ID.
• Pace alleged the discrepancy was a clerical error and that Mr. Pandian had no involvement in the trading activities.
• The order cites sections 15A(a), 15A(c), and 15HB of the SEBI Act as the basis for potential penalties.

Also in the document

• The investigation period covers two financial years (2020-2022).
• The order details a specific dispute over the identity of the trader associated with a terminal ID, with SEBI relying on exchange records (NSE/BSE) that listed Mr. Pandian, while the broker attributed the trades to Mr. Ranjan.
• The document is an adjudication order, meaning SEBI is determining the penalty for the alleged violations rather than just investigating them.