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

This is an adjudication order by SEBI regarding Pace Stock Broking Services Private Limited, examining allegations that the firm front-ran trades of Axis Mutual Fund and failed to maintain required IP address and user ID records.

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

• 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.

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