SEBI Imposes ₹10 Lakh Penalty Each On Woodstock, Marfatia Stock Broking For Axis MF Front-Running

On 3 November, the Securities and Exchange Board of India (SEBI) imposed a penalty of Rs. 10 lakh each on Woodstock Broking Private Limited, Marfatia Stock Broking Private Limited and their respective directors, Suresh Kanmal Jajoo and Nishil Surendra Marfatia, for facilitating front-running of trades placed by Axis Mutual Fund by enabling unauthorised access to their trading terminals.

Adjudicating Officer Jai Sebastian held that the two stock brokers had facilitated the installation and operation of their ODIN trading terminals on a computer used by Prijesh Kurani in Dubai. He observed:

“In my view, the conduct of Noticee nos. 1 and 7 cannot be trivialized as a mere case of routine software installation or ordinary technical assistance. A SEBI registered stock broker is expected to exercise heightened care and control over its terminal access, user chain and trading infrastructure.”

SEBI investigated allegations of front-running of trades placed by Axis Mutual Fund between April 2021 and March 2022. The investigation found that Viresh Joshi, then Chief Dealer of Axis Mutual Fund, allegedly shared confidential information about impending trades with Prijesh Kurani, who used the information to execute trades through multiple trading accounts.

During the investigation, it seized mobile devices belonging to Kurani and his wife, Dharini Kurani, and examined their WhatsApp chats. The chats allegedly revealed that IT personnel of Woodstock Broking and Marfatia Stock Broking had installed their ODIN trading terminals on Kurani's computer in Dubai using AnyDesk, a remote-access software, and provided technical assistance.

Subsequently, the regulatory body initiated adjudication proceedings against the two brokerage firms and their directors for allegedly facilitating front-running by enabling access to their trading terminals and providing technical support. It had dealt separately with the substantive front-running allegations against the principal entities in an order dated 24 July 2026.

Rejecting Woodstock Broking's contention that it had merely provided routine brokerage services and had no direct involvement in the front-running, the Adjudicating Officer held:

“A registered stock broker is not a passive bystander when its terminal access is enabled and technically maintained for use by a person who is not its authorised dealer/authorised person. The very fact situation goes beyond routine broking service.”

The Officer noted that Woodstock Broking's own IT personnel had installed the trading software and enabled Kurani to access it from Dubai. He therefore rejected the broker's claim that it was unaware of Kurani's use of the terminal.

Further, the Board rejected Marfatia Stock Broking's contention that its IT department had merely provided technical support to install freely downloadable ODIN software.

It clarified that the issue was not the legality of installing the software, but whether the broker had facilitated terminal access for a person who was neither its authorised person nor registered dealer and who allegedly used the terminal to execute front-running trades.

Moreover, the regulator held that Marfatia Stock Broking could not escape liability merely because its IT employee had not directly shared the login credentials. It clarified that the allegation concerned facilitating access to the broker's trading terminal through its infrastructure and IT support, and did not necessarily require the broker to have supplied the credentials.

The Adjudicating Officer also held that the expression “dealing in securities” under the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, covers acts of providing assistance to securities transactions. The brokers, therefore, could not avoid liability merely because they had not directly placed the trades.

He held Jajoo and Marfatia liable, finding that they had actively facilitated the use of the trading accounts and terminals. However, he declined to hold the other directors liable, observing that merely holding the position of a director was insufficient to establish liability.

Accordingly, SEBI imposed a penalty of Rs. 10 lakh each on Woodstock Broking, Jajoo, Marfatia Stock Broking and Marfatia.