- SEBI fined Pace Stock Broking Rs. 4 lakh for failing to maintain audit-trail records
- Pace did not provide trader-specific IP addresses for 93 trading instances
- SEBI rejected Pace's claims of technical and pandemic-related limitations
The Securities and Exchange Board of India (SEBI) has imposed a Rs. 4 lakh penalty on Pace Stock Broking Services Pvt. Ltd. for failing to maintain key audit-trail records and for providing incorrect information during an investigation into the alleged front-running of Axis Mutual Fund trades.
The order does not find Pace guilty of front-running itself but focuses on compliance failures that SEBI said hindered the investigation. The regulator said the broker was unable to provide trader-specific IP address information for 93 trading instances despite being required to maintain detailed records linking orders to individual dealers and trading terminals.
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Pace had argued that technical limitations and pandemic-era challenges prevented it from tracing the precise IP addresses used by specific traders. SEBI rejected those explanations, saying the broker had failed to substantiate the alleged constraints with evidence.
In the order, SEBI noted that Pace had acknowledged it was "unable to ascertain and map the specific MAC ID and IP address corresponding to each individual trader." The regulator concluded that the firm had violated record-keeping obligations applicable to stock brokers.
SEBI also took issue with the broker's handling of trading terminal registrations. The regulator found that credentials belonging to Kaleeswaran Pandian, who was not functioning as a dealer for Pace during the relevant period, were used to obtain and maintain terminal IDs and user IDs that were allegedly operated by another individual.
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Pace described the mismatch as a clerical error, but SEBI said repeated renewals and updates of the registrations over several years were "inconsistent" with the claim of a one-time mistake.
The regulator further found that Pace provided incorrect information regarding the identity of a dealer linked to a user ID examined during the probe. SEBI said the firm's failure to furnish correct information "hampered the instant investigation" and fell short of the standards of diligence expected of a registered broker
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