Axis Securities Resolves SEBI Case with ₹14.62 Lakh Settlement

Axis Securities has resolved a front-running case involving its former employee Vikrant Bhimrao Kadam and his friend by paying SEBI a settlement amount of ₹14.62 lakh.

Allegations of Non-Compliance

The case stemmed from allegations that Axis Securities, as a stockbroker, did not adequately enforce due diligence under its Dealer and Branch Manager Compliance Policy. The accusations centred around Kadam’s alleged involvement in front-running trades for a major client, SVI Consolidated Pvt Ltd, in the equity and derivatives markets.

Settlement Terms

Axis Securities proposed to settle the matter with SEBI without admitting or denying the accusations. After paying ₹14.62 lakh, SEBI closed the case initiated through a show cause notice on June 4, 2024.

SEBI Clarification

SEBI clarified that Mandar Ulhas Bhatkar, a key figure in the case, was never employed or associated with Axis Securities. Additionally, Kadam, who played a central role, is no longer with the company.

Strengthened Operations

Axis Securities emphasised that it has reviewed its processes and implemented measures to prevent unethical practices. The company stated its commitment to maintaining high standards of integrity and a zero-tolerance policy against misconduct.

Investigation Findings

The investigation revealed that Kadam, a former dealer with Axis Securities, collaborated with his friend Bhatkar to trade on advanced information about a client’s orders, a practice known as front-running. Bhatkar allegedly provided funds and consent for Kadam to execute trades through his account, leading to substantial profits.

Lapses in Compliance

The investigation found breaches in the Dealer and Branch Manager Compliance Policy at multiple Axis Securities branches across India. SEBI alleged that the company’s lax enforcement enabled Kadam and Bhatkar to exploit client information for personal gain, violating SEBI’s Stock Brokers Regulations.

Front-running is an illegal practice that involves trading on privileged information before it becomes available to clients, thereby gaining an unfair advantage.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.