Sebi penalises two broking firms with forty lakh rupees for Axis Mutual Fund front-running violations

Securities and Exchange Board of India (Sebi) levied financial penalties totalling forty lakh rupees on two stockbroking firms, Woodstock Broking and Marfatia Stock Broking, due to regulatory breaches. The investigation uncovered that both firms permitted unauthorised access to their designated trading terminals. This security lapse directly enabled an individual named Prijesh Kurani, operating remotely from Dubai, to execute illicit front-running trades using confidential insider details concerning upcoming transactions by Axis Mutual Fund. Front-running occurs when a broker or connected entity executes trades ahead of a large client order to profit from the anticipated price movement, undermining market fairness.

Regulatory bodies enforce strict operational frameworks to prevent intermediaries from leaking non-public transaction data or granting proxy access to third parties. Under previous norms, brokers exercised greater operational laxity regarding terminal delegation, but regulatory oversight now mandates absolute accountability for every trade routed through a member's infrastructure, penalising firms that fail to secure their digital perimeters. Stockbrokers and compliance officers must immediately audit their terminal allocation protocols, revoke shared or proxy access credentials, and ensure complete segregation of trading infrastructure.

Compliance teams should review internal surveillance mechanisms to flag unauthorised remote logins originating from foreign jurisdictions like Dubai. Bottom line: robust terminal governance protects your brokerage license and shields your firm from severe regulatory sanctions.