Securities watchdog, Sebi, receives a settlement of 34.85 million rupees from Motilal Oswal for the alleged violation involving front-running activities.
Motilal Oswal Financial Services Settles Case of Suspected Frontier-Running for Rs 34.85 lakh
Motilal Oswal Financial Services (MOFSL) has settled a case related to suspected frontier-running of trades for Rs 34.85 lakh. The settlement was proposed by MOFSL without admitting or denying the findings of facts and conclusions of law.
The investigation was carried out by the Securities and Exchange Board of India (Sebi) to ascertain whether the trades of a large client were frontier-run by certain entities during the period January 1, 2022, to December 8, 2023. The alleged lapses occurred with one of MOFSL's authorized partners, but no specific partner has been publicly named.
The regulator accused MOFSL of attempting to create supporting documents after trade execution, raising concerns over compliance standards. The proceedings initiated through a show cause notice have been disposed of in terms of the settlement. The order was issued by Sebi's Quasi Judicial Authority, Santosh Shukla.
The order does not provide any information about the outcome of the investigation or any penalties imposed on the entities involved. However, it states that the proceedings against MOFSL have been disposed of in terms of the settlement terms. The regulator reserves the right to act if representations made by MOFSL are later found untrue or if there is any breach of the settlement terms.
Frontier-running is an illegal practice in the stock market where an entity trades based on advance information. MOFSL received a show cause notice from the regulator on February 20, 2025, alleging failure to maintain proper records of client order instructions.
MOFSL filed a settlement application and revised settlement terms, which were approved by the regulator. A spokesperson for MOFSL stated that the matter has been resolved following the settlement. The settlement marks the end of a lengthy investigation and serves as a reminder for all market participants to maintain the highest standards of compliance and integrity.
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