SEBI Is Looking Into Supposed Front-Running at Quant Mutual Fund: Reports

One of the nation’s fastest-growing asset managers, Quant Mutual Fund, is the subject of an investigation by the Securities and Exchange Board of India (SEBI) into claims of front-running. Trading on insider information and making deals before a larger client does so is known as “front-running,” and it is against the law. The Economic Times said that as part of SEBI’s investigation, searches and seizures have taken place at Quant’s Mumbai headquarters and the homes of potential beneficiaries in Hyderabad.

Alerts from SEBI’s monitoring system, which showed that some entities’ transactions closely resembled Quant Mutual Fund’s, set off the probe and raised concerns about possible information leakage. According to a person with knowledge of the investigation, “Transactions that were suspiciously similar to trades made by Quant Mutual Fund were flagged by SEBI’s surveillance system.” There are concerns over potential information leaks because of this tendency.

Digital equipment, including laptops and mobile phones, have been taken from Quant’s offices and the homes of people who are accused by SEBI in order to obtain evidence. We’ll investigate these devices to find out where any private trade secrets may have leaked. According to preliminary findings, transaction data may have been leaked by a Quant dealer or a broking company managing the fund’s orders.

Sandeep Tandon, the founder of Quant, assured investors that the company would cooperate with SEBI in response to the probe. SEBI recently sent questions to Quant Mutual Fund. We would like to address any worries you might have about this. Being a regulated company, Quant Mutual Fund is dedicated to working with the regulator to complete the review process. Tandon declared, “We will continue to give data to SEBI as needed and will offer all necessary cooperation.

With quick expansion, Quant Mutual Fund now has assets under management of about Rs 1 lakh crore spread across several schemes. With assets of Rs 21,243 crore, the small-cap program by itself has returned 68% in the last year. But the probe has soured investor mood and caused small and midcap stocks on Dalal Street to plummet precipitously.

Chief Investment Strategist at Geojit Financial Services Dr. V K Vijayakumar stated, “The SEBI investigation into Quant Mutual Fund is a slight negative sentiment for the market.”

Not very long ago, Aditya Birla Mutual Fund was the subject of a front-running investigation akin to this one. In the Aditya Birla case, SEBI permitted the defendants to reach a settlement by imposing a voluntary six-month debarment from the securities market and paying over Rs 2.8 crore. Another recent example involved the banning of 20 individuals from the securities markets together with Viresh Joshi, the former chief dealer of Axis Mutual Fund, due to an alleged front-running occurrence.

In reaction to the increasing quantity of front-running and insider trading instances, SEBI has implemented regulatory modifications with the goal of enhancing internal control protocols, surveillance systems, and escalation procedures to prevent fraudulent transactions. One of the modifications is that all conversations between dealers and fund managers must be recorded during market hours, with the exception of in-person and after-hours exchanges.

Sandeep Tandon launched Quant Mutual Fund, which has seen tremendous growth, with assets under management rising from Rs 100 crore in 2019 to over Rs 84,030 crore. The fund house maintains 79 lakh folios and oversees 27 funds across five fund managers. Quant Mutual Fund is still dedicated to investor transparency and regulatory compliance in spite of the ongoing investigation.