| Company | Value | Change | %Change |
|---|
It was alleged that as a stock broker, Axis Securities failed to exercise appropriate due diligence in the matter in its dealer and branch manager compliance policy.
The order came after Axis Securities filed an application with Securities and Exchange Board of India (Sebi) proposing to settle the violation of broker regulations “without admitting or denying the findings of fact and conclusions of law”.
In its settlement order, Sebi said the broker remitted the settlement amount of ₹14.62 lakh and consequently the instant “proceeding initiated against the applicant (Axis Securities) vide show cause notice dated June 4, 2024, is disposed of”.
In a statement, Sebi clarified that the alleged frontrunner Mandar Ulhas Bhatkar has not been an employee of or associated with Axis Securities in any manner, and Vikrant Bhimrao Kadam is no longer an employee of Axis Securities.
Axis Securities said it has strengthened its operations through process reviews and maintain zero tolerance for unethical practices, ensuring the highest standards of integrity.
Front-running refers to an illegal practice, where an entity trades based on advanced information from a stock broker or analyst before the information has been made available to clients.
The regulator had conducted an investigation in the matter of trading activities of Mandar Ulhas Bhatkar and certain other entities related/associated with him, suspected to be front-running trades of SVI Consolidated Pvt Ltd (Big Client, client of Axis Securities).
The investigation, prima facie, found that Vikrant Bhimrao Kadam, who worked as a dealer with Axis Securities, and his childhood friend Bhatkar, were front-running the trades of Big Client in the equity and derivatives segments of NSE, the order noted.
Based on the findings in the investigation, a show cause notice dated June 4, 2024 was served on Axis Securities.
In its show cause notice, Sebi alleged that Bhatkar received funds from Kadam to enable the latter — then a dealer of Axis Securities — to trade in the scrips/contracts in which the Big Client traded.
Also, he had given his consent to Kadam to trade in the securities market through his trading account.
Therefore, Bhatkar and Kadam together in collusion took advantage of the orders/trades of Big Client by front-running the orders/trades of Big Client and earned huge profits.
Accordingly, the investigation revealed that the Dealer & Branch Manager Compliance Policy was breached by certain staff members in different cities of India where branches of Axis Securities are located.
This casual approach of Axis Securities resulted in its dealer Kadam in colluding with his friend Bhatkar to carry out front-running activities using mobile phone from the premises of the applicant.
Therefore, it was alleged that as a stock broker, the applicant failed to exercise appropriate due diligence as required in its Dealer & Branch Manager Compliance Policy, and accordingly it violated the provisions of Sebi’s Stock Brokers Regulations.
