Motilal Oswal settles Sebi front-running case with ₹34.85 lakh; probe closed

Motilal Oswal Financial Services Ltd. (MOFSL) has resolved a regulatory dispute with the Securities and Exchange Board of India (SEBI) by agreeing to a settlement of ₹34.85 lakh. The case stemmed from alleged lapses linked to suspected front-running of trades involving a large institutional client.

Motilal Oswal Financial Services Ltd. (MOFSL) has resolved a regulatory dispute with the Securities and Exchange Board of India (SEBI) by agreeing to a settlement of ₹34.85 lakh. The case stemmed from alleged lapses linked to suspected front-running of trades involving a large institutional client.

Front-running, a banned practice in India’s capital markets, occurs when entities exploit advance trading information to gain unfair profits before the information reaches other investors. Sebi had accused MOFSL of failing to maintain proper order records, attempting to create documents after trades were executed, and not exercising due diligence expected from a registered stockbroker.

The market regulator issued a show-cause notice to MOFSL in February 2025 after investigating whether certain entities, specifically the Chaturvedi Group, front-ran trades between January 2022 and December 2023. MOFSL subsequently filed for a settlement in March, revising its terms before Sebi approved the final resolution on September 17.

A spokesperson for the brokerage stated that the issue primarily involved lapses by its authorized partner, Om Securities, and clarified that opting for settlement was the only practical course of action forward. “The matter now stands resolved,” the company stated.

Sebi’s order emphasized that while the proceedings against MOFSL are closed, the regulator reserves the right to act if future evidence shows false representations or breaches of settlement conditions.

(With inputs from agencies.)