SEBI fines Pace Stock Broking in Axis Mutual fund front-running case

The Securities and Exchange Board of India (SEBI) has imposed a penalty of ₹4 lakh on Pace Stock Broking Services for regulatory lapses identified during its investigation into the alleged front-running of Axis Mutual Fund trades by certain clients of the brokerage.

The investigation covered the period from April 1, 2020, to March 31, 2022, during which SEBI examined trades executed through Pace Stock Broking that were suspected of front-running those of Axis Mutual Fund. SEBI has directed the brokerage to pay the amount within 45 days of receiving the order.

Based on SEBI’s findings, Pace Stock Broking failed to maintain and furnish trade-wise IP address records in the manner prescribed under SEBI's November 6, 2013 circular governing algorithmic trading.

While the brokerage said it has maintained IP address records, it was unable to provide the corresponding IP addresses mapped to specific user IDs, dealers or traders in 93 instances during the investigation. SEBI said that this amounted to non-compliance with the prescribed record-keeping requirements.

SEBI also observed that terminal IDs and user IDs had been allotted in the name of Kaleeswaran Pandian between September 14, 2015, and April 27, 2022, despite him not being a dealer or an approved person of the brokerage during the investigation period. The regulator alleged that his credentials, including his KYC details and NISM certification, were used to obtain trading terminal IDs and user IDs from the National Stock Exchange (NSE) for Pace's Chennai and Ghaziabad branches.

Pace Stock Broking said that the mapping of Mr Pandian's details to a CTCL ID was an inadvertent clerical or copy-and-paste error and that the terminal was actually operated by Rajeev Ranjan. However, SEBI rejected this explanation, saying that the relevant terminal IDs and user IDs had not only been allotted in Mr Pandian's name but had also been renewed and updated over several years.

The regulator said that incorrect information regarding Mr Ranjan, whom Pace had identified as the dealer operating a particular user ID during the investigation period. The regulator concluded that the brokerage had failed to maintain accurate and updated records relating to user IDs, terminal IDs and approved dealers, in violation of applicable NSE circulars and regulatory requirements.

Published on July 22, 2026