After paying Rs 14.62 lakh towards the settlement sum, Axis Securities reached a settlement with markets regulator Sebi regarding front-running trades made by its former employee Vikrant Bhimrao Kadam and his associate.
According to its dealer and branch manager compliance policy, Axis Securities was accused of failing to perform the proper due diligence in the case while acting as a stock broker.
Axis Securities attempted to resolve the broker regulatory violation "without admitting or denying the findings of fact and conclusions of law" in an application submitted to the Securities and Exchange Board of India (Sebi), which resulted in the ruling.
Sebi stated in its settlement order that the "proceeding initiated against the applicant (Axis Securities) via show cause notice dated June 4, 2024 is disposed of" as a result of the broker sending the Rs 14.62 lakh settlement amount.
Sebi confirmed in a statement that Vikrant Bhimrao Kadam is no longer employed by Axis Securities and that the purported frontrunner Mandar Ulhas Bhatkar has never worked for or been connected to Axis Securities in any way.
In order to ensure the highest standards of integrity, Axis Securities stated that it has reinforced its operations through process reviews and maintains zero tolerance for unethical behavior.
An entity that trades based on advanced information from a stock broker or analyst before the information has been made accessible to clients is engaging in an illegal behavior known as "front-running."
The trading activities of Mandar Ulhas Bhatkar and a few other businesses connected to him were investigated by the regulator because they were thought to be front-running trades of SVI Consolidated Pvt Ltd (Big Client, client of Axis Securities).
According to the ruling, the probe first concluded that Vikrant Bhimrao Kadam, a dealer with Axis Securities, and his childhood buddy Bhatkar were front-running Big Client's trades in the NSE's stock and derivatives segments.
Axis Securities received a show-cause notice on June 4, 2024, in response to the investigation's conclusions.
Sebi claimed in its show cause notice that Bhatkar had accepted money from Kadam, who was then an Axis Securities dealer, so that Kadam may trade in the contracts and scrips that the Big Client did.
Additionally, he had granted Kadam permission to use his trading account to trade in the securities market.
As a result, Bhatkar and Kadam colluded to take advantage of Big Client's orders and transactions by front-running them and making enormous gains.
Accordingly, the inquiry found that some employees in various Indian locations where Axis Securities has branches violated the Dealer & Branch Manager Compliance Policy.
Due to Axis Securities' careless behavior, its dealer Kadam conspired with his friend Bhatkar to conduct front-running operations from the applicant's location using a mobile phone.
Thus, it was claimed that the applicant breached the terms of Sebi's Stock Brokers Regulations by failing to undertake the proper due diligence as mandated by its Dealer & Branch Manager Compliance Policy in its capacity as a stock broker.
