SEBI Imposes ₹40 Lakh Penalty in Axis Mutual Fund Front-Running Case

Key Takeaways

• SEBI imposed penalties totalling ₹40 lakh on two stockbroking firms and two directors in connection with the Axis Mutual Fund front-running investigation.
• Woodstock Broking, Marfatia Stock Broking and their respective directors were fined ₹10 lakh each.
• The regulator examined trading activity between April 2021 and March 2022, including unauthorised access to trading infrastructure from Dubai.

SEBI Penalises Four Entities Over Trading-Terminal Access

The Securities and Exchange Board of India (SEBI) has imposed penalties totalling ₹40 lakh on four entities in connection with its investigation into front-running trades involving Axis Mutual Fund.

In an order dated 3 November 2026, the market regulator levied penalties of ₹10 lakh each on Woodstock Broking Private Limited, its director Suresh Kanmal Jajoo, Marfatia Stock Broking Private Limited and its director Nishil Surendra Marfatia.

The enforcement action concerns the alleged use of confidential information relating to forthcoming mutual fund transactions and the role of brokerage infrastructure in executing trades ahead of those orders.

The Economic Times reported the development on 4 November, following the regulator's order a day earlier.

Investigation Examined Trades Between April 2021 and March 2022

SEBI's investigation followed alerts generated by its market surveillance system involving transactions executed ahead of Axis Mutual Fund, which was identified as the principal institutional client.

The investigation covered April 2021 to March 2022.

According to the findings, Viresh Joshi, who was then chief dealer at Axis Mutual Fund, allegedly provided information concerning the fund's impending transactions.

Prijesh Kurani, operating from Dubai, was identified as an individual involved in executing suspected front-running trades.

The regulator examined whether brokerage firms had enabled access to their trading systems in a manner that facilitated these transactions.

Brokerage Firms' Role in the Investigation

SEBI found that Woodstock Broking and Marfatia Stock Broking had facilitated access to trading terminals outside the authorised framework.

The investigation referred to the installation and operation of ODIN trading software through remote-access arrangements.

The regulator considered the brokerage firms' responsibilities under securities laws and the Prohibition of Fraudulent and Unfair Trade Practices regulations.

The findings distinguished between the alleged front-running activity and the role played by intermediaries in facilitating access to trading infrastructure.

Proceedings Against Six Other Noticees Closed Without Penalties

Although the wider adjudication proceedings involved ten noticees, SEBI imposed monetary penalties on four.

Proceedings against the remaining six noticees were disposed of without monetary penalties in this order.

The decision illustrates the regulatory importance of maintaining controls over brokerage terminals, authorised users and access to market infrastructure.

Front-running involves trading ahead of a known large transaction to potentially benefit from the resulting price movement. Such activity can undermine the fairness of securities markets.

The latest order adds to the regulatory proceedings arising from the Axis Mutual Fund investigation, while the penalties announced in this particular adjudication are limited to the four entities identified.

Verification: SEBI adjudication findings as reported by Moneycontrol on 3 November and The Economic Times on 4 November.

Moneycontrol+1