Motilal Oswal Financial Services Pays Rs34.85 Lakh To Settle Front-Running Probe
Moneylife Digital Team 19 September 2025
Motilal Oswal Financial Services Ltd (MOFS) has settled adjudication proceedings with the market regulator Securities and Exchange Board of India (SEBI) by paying Rs34.85 lakh. The case pertained to alleged lapses in due diligence in connection with suspected front-running of trades of a large client by the Chaturvedi Group during the period 1 January 2022 to 8 December 2023.
 
SEBI investigation revealed that MOFS, acting as a registered stockbroker, had failed to maintain proper evidence of client order instructions and allegedly attempted to create supporting documents after the execution of the trades. A show cause notice (SCN) dated 20 February 2025 was issued to the company, calling upon it to explain why regulatory action should not be taken for violations of the SEBI Act, 1992, and SEBI (Stock Brokers) Regulations, 1992.
 
Pending the proceedings, MOFS submitted a settlement application on 13 March 2025, proposing to resolve the matter without admitting or denying the findings. SEBI registered the application on 25 March 2025, under the SEBI (Settlement Proceedings) Regulations, 2018. 
 
The internal committee (IC) of SEBI deliberated on the proposal on 9 May 2025 and recommended a settlement amount of Rs34.85 lakh, considering the factors under Regulation 10 and Schedule II of the Settlement Regulations. The company subsequently filed revised settlement terms on 16 May 2025.
 
Following this, the high-powered advisory committee (HPAC), in its meeting on 3 July 2025, considered the revised terms and recommended the case for settlement. SEBI panel of whole-time members (WTM) approved the recommendation on 5 September 2025.
 
A notice of demand was issued to MOFS on 10 September 2025 and the stockbroker confirmed payment on 16 September 2025. SEBI acknowledged receipt of the settlement amount on 17 September 2025.
 
The settlement order, passed under Section 15JB of the SEBI Act, formally disposes of the proceedings against MOFS in this matter. However, the order clarifies that SEBI reserves the right to initiate fresh enforcement action if the representations made during the settlement are later found to be untrue, or if any undertakings or conditions are breached.
 
Commenting on the order, MOFS says, "The SEBI settlement order announced relates to involvement and non-maintenance of records by one of our authorised partners (AP)- Om Securities. We had to opt for the settlement route and the matter now stands resolved."
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