Amid reports of alleged front-running, Quant Mutual Fund has said it received inquiries from the Securities and Exchange Board of India (SEBI) and is fully committed to cooperating with the market regulator.
“Recently, Quant Mutual Fund has received inquiries from SEBI, and we want to address any concerns you may have regarding this matter. We will provide all necessary support and continue to furnish data to SEBI on a regular and as-needed basis,” Quant Mutual Fund said in a statement on Sunday (June 23, 2024).
According to Moneycontrol, SEBI conducted search and seizure operations at Quant Mutual Fund, suspecting front-running activities. These searches took place in Mumbai and Hyderabad.
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The regulator suspects that someone, either from Quant or a brokerage firm handling their orders, was leaking information about upcoming trades.
During the search operations, SEBI has seized all digital devices, including mobile phones and computers, to gather evidence.
Based on its initial findings, SEBI plans to question all individuals who had access to Quant Mutual Fund’s trade information.
The investigation is centered on Quant executives who knew the details and timing of orders that were not publicly available and allegedly shared this confidential information with the suspected beneficiaries.
Quant Mutual Fund, established by Sandeep Tandon, obtained its mutual fund license from the Securities and Exchange Board of India (SEBI) in 2017.
Since then, it has grown rapidly, with assets increasing from around Rs 100 crore in 2019 to over Rs 90,000 crore today. In January 2024, it surpassed Rs 50,000 crore in assets, managing a portfolio of 26 schemes and 5.4 million investment accounts.
What are Front-running Activities?
Front-running is an illegal practice where fund managers, dealers, or brokers use insider knowledge of upcoming large trades to place their own orders first and profit from the subsequent stock price movement.
Also Read: SEBI Introduces System Audit Framework for Professional Clearing Members (PCMs)
This can be done in various ways, depending on who is involved. One common method is buying large blocks of stocks in their hidden personal accounts before transferring them to the fund account, leading to higher acquisition prices for the publicly owned mutual fund.
These transactions are typically hard to detect since they are executed through trading accounts that are not in the names of those involved.
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Disclaimer: The above content is for informational purposes only. Please consult a SEBI-registered investment advisor before investing.
