Recently, Securities and Exchange Board of India (SEBI) conducted search and seizure operations on the Quant Mutual Fund. There have been suspicions of front-running activities at Quant MF under the ownership of Mr. Sandeep Tandon. These operations took place on Friday and Saturday at various locations in Delhi, Mumbai and Hyderabad.
Impact on Retail Investors
Quant Mutual Fund is trusted with the money of 79 lakh retail investors. This news might cause concern to those investors, but also to the stocks in which Quants MF have invested. However, understanding front-running and the current situation can help ease some worries.
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What is Front-Running?
Front-running is an illegal practice where a trader uses insider knowledge and tips about upcoming orders from clients. This helps the trader to trade for their own benefit. This practice is not under the compliance of SEBI and undermines market fairness and integrity.
Quant Mutual Fund’s Response
Quant Mutual Fund has responded to this investigation by SEBI. They emphasized their commitment to fully cooperate with SEBI. QMF assured investors of their dedication to transparency, ethical practices & regulatory compliance.
Fund’s Growth and Performance
Quant Mutual Fund has experienced significant growth over the past few years. As of May 2024, Quant MF’s Assets Under Management (AUM) is at INR 84,000 crores. The equity investments alone make up 97% of the total AUM. Since December, 2019, this is a massive increase of 46,285% in the AUM.
Details of the Allegations
SEBI officials have searched Quant Mutual Fund’s offices in Hyderabad and Mumbai. Reports suggest that the alleged front-running operations may have generated profits of INR 20 crore. QMF confirmed receiving inquiries from SEBI. They stated their full commitment and co-operation to Quant MF for this investigation.
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Industry Context
Similar to this Quant Mutual Fund investigation, other mutual funds have also got probe. Recently, Aditya Birla Mutual Fund faced a front-running probe and settled the case by paying over INR 2.8 crore. Along with this, they had a voluntary six-month debarment from the securities market. On February 3, 2023, Axis Mutual Fund’s former chief dealer and others were banned from the securities markets due to front-running allegations.
SEBI’s Measures Against Fraud
SEBI has been strengthening its regulations to prevent fraudulent activities like front-running and insider trading. New rules include better surveillance, internal controls and mandatory recording of communications during market hours.
About the Author
Mr. Radhesh Tarang Shah is a third-year management student at the Institute of Management, Nirma University. He has a passion for writing articles and poems. He has experience as a financial analyst, author, news writer, marketer and social worker.
