SEBI Imposes ₹30 Lakh Penalty On Madhav Stock Vision And Others For Front Running LIC Trades

The Securities and Exchange Board of India (SEBI) on 24 July held that trades executed by Madhav Stock Vision Private Limited (MSVPL) ahead of Life Insurance Corporation of India (LIC) orders using unpublished information amounted to front running, and imposed a consolidated penalty of Rs. 30 lakh on the company and five connected individuals.

SEBI Whole Time Member Amarjeet Singh passed the order and directed the noticees to disgorge Rs. 2.51 crore along with interest, while restraining them from accessing the securities market for one year. He observed:

“The said acts on part of the Noticees are fraudulent in terms of Regulation 2(1)(c) of the PFUTP Regulations,and the violation of Section 12A(a), (b) and (c) of the SEBI Act read with Regulation 3(a),(b), (c) and (d) and Regulation 4(1) and 4(2)(q) of the PFUTP Regulations is established against the Noticees.”

SEBI initiated proceedings against MSVPL and five individuals after investigating alleged front running of LIC trades between 1 April 2020 and 1 December 2023. The investigation was triggered after SEBI's surveillance system detected trades by MSVPL shortly before LIC's orders. The regulator alleged that two dealers employed with LIC's empanelled brokers accessed confidential information regarding LIC's proposed trades and shared it with MSVPL's dealer and directors. MSVPL allegedly used this information to place trades ahead of LIC's orders and earn unlawful profits.

In April 2025, SEBI issued an interim order cum show cause notice alleging violations of the SEBI Act and the Prohibition of Fraudulent and Unfair Trade Practices Regulations (PFUTP Regulations). It proposed disgorgement of alleged unlawful gains of Rs. 2.72 crore and restrained the noticees from accessing the securities market.

The noticees denied being part of any front running arrangement. However, they admitted that certain equity cash segment trades could, in hindsight, be viewed as front running. They disputed SEBI's findings relating to the Futures and Options (F&O) segment and sought a lenient view, citing cooperation during the investigation and absence of previous regulatory violations.

SEBI observed that the noticees had admitted that MSVPL's equity cash segment trades could be construed as front running. It noted that their primary defence was that the F&O trades were genuine intraday trades executed without relying on any unpublished information.

After examining call records, trading patterns, statements recorded during investigation and alleged profit-sharing arrangements, SEBI concluded that the evidence established a coordinated front running arrangement and that the violations under the SEBI Act and PFUTP Regulations stood proved.

However, it accepted the noticees' contention regarding the F&O segment, holding that the material on record did not establish a recognisable pattern or sequence to classify MSVPL's F&O trades as front running. It therefore excluded the alleged unlawful gains from those trades while calculating the disgorgement amount.

Accordingly, SEBI directed the noticees to jointly and severally disgorge Rs. 2.51 crore with interest, imposed a consolidated penalty of Rs. 30 lakh, and barred them from accessing the securities market for one year.