Motilal Oswal settles front-running case with SEBI, pays Rs.34.85 lakh
The regulator had issued a show-cause notice alleging that the brokerage did not keep proper records of client order instructions
Motilal Oswal Financial Services has settled the matter with the Securities and Exchange Board of India (SEBI) by paying Rs.34.85 lakh towards settlement charges regarding the alleged lapses on suspected front-running trades of a large client.
(Front-running refers to an illegal practice in the stock market where an entity trades based on advance information from a broker or analyst before it’s available to the clients).
Motilal Oswal proposed to settle instant proceedings initiated against it, “without admitting or denying the findings of facts and conclusions of law.”
Thereafter, Santosh Shukla, SEBI’s Quasi-Judicial Authority, said in the order, “The proceedings initiated against the applicant (MOFSL) vide a show-cause notice of 20 February 2025, are disposed of in terms of settlement terms.”
The case stemmed from an investigation by the market regulator to ascertain whether the trades of an entity (big client) were front-run by certain entities i.e. the Chaturvedi Group, from 1 January 2022 to 8 December 2023.
On probing, the regulator issued a show-cause notice to MOFSL, alleging that the brokerage failed to exercise due skill and care expected of a registered stockbroker by not keeping proper records of client order instructions.
Additionally, the markets watchdog charged MOFSL for supporting documents after the execution of trades, raising concerns over compliance standards and flouting SEBI’s (Stock Brokers) Regulations, 1992.
After a settlement application in March 2025, Motilal Oswal filed revised settlement terms that were approved by SEBI. Under the terms, the company paid Rs.34.85 lakh to the regulator, and the matter was disposed.
However, SEBI clarified that it retained the right to act if representations made by the company were found untrue, or if there was any breach of the settlement terms.