Accused of front-running trades in KPIT Technologies, Anand Rathi Share and Stock Brokers Limited has opted for a ₹90.2 lakh settlement with SEBI. The case highlights lapses in due diligence, misuse of employee credentials, and opaque dealings with a key client, Mehrangarh Financial Advisors. While the settlement brings the case to a close, SEBI has reserved the right to reopen it should further violations surface.
Front-Running Allegations: Anatomy of a Market Breach
The Securities and Exchange Board of India (SEBI) launched an investigation into Anand Rathi Share and Stock Brokers Limited over alleged front-running activities involving trades in KPIT Technologies Limited.
The crux of the allegation lay in the brokerage firm executing trades based on confidential information before executing large client orders, thereby profiting from the anticipated price movement an act that undermines market integrity and investor confidence.
Central to the case was Anand Rathi’s association with Mehrangarh Financial Advisors Private Limited (MFAPL), a client whose trades were reportedly executed using the brokerage’s employees’ email addresses. SEBI found that the firm bypassed standard due diligence processes and relied on outdated authorization letters, allowing trades to be executed in a non-transparent and potentially fraudulent manner.
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The regulator accused the firm of violating key provisions of the SEBI Act, 1992, and the Stock Brokers Regulations, raising red flags about internal controls, client verification practices, and record-keeping.
The Settlement: No Admission of Guilt, but ₹90.2 Lakh Paid
After issuing a Show Cause Notice in March 2024, SEBI offered Anand Rathi the opportunity to settle the case through a consent mechanism—a regulatory framework that permits entities to close proceedings without admitting or denying guilt, in exchange for a monetary settlement.
Anand Rathi agreed to settle the case for ₹90,20,000, a figure recommended by SEBI’s Internal Committee and later reviewed by the High Powered Advisory Committee (HPAC). The final approval came from SEBI’s panel of Whole Time Members in December 2024, and the payment was made in April 2025.
The case has since been marked officially closed under the SEBI (Settlement Proceedings) Regulations, 2018, which allows for negotiated resolutions in administrative and civil cases.
Future Ramifications: A Closed Chapter, But Not Without Caution
While the settlement brings an end to enforcement proceedings in this specific instance, SEBI has issued a caveat. The regulator explicitly stated that it reserves the right to reopen the case should there be evidence of concealment, misrepresentation, or violation of settlement terms.
This clause keeps the regulatory window ajar for future scrutiny, particularly as SEBI continues to tighten its oversight over intermediaries and emphasizes accountability and transparency in market operations.