June 24, 2024
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Sebi launches probe on Quant MF, suspects front-running.
Quant Mutual Fund is one of the fastest-growing funds with 80 lakh folios, small-cap scheme returned 68% in the last year, managing assets worth Rs.93,000 crore. Quant Capital acquired Escorts Mutual Fund in 2018 and relaunched it as Quant Mutual Fund.
The Sebi is probing Quant Mutual Fund, one of the country’s fastest-growing asset managers, for alleged front-running – an illegal practice of trading in stocks based on privileged information.
The capital markets regulator, as part of its investigation, has conducted search and seizure operations in Quant’s head office in Mumbai and at the address of the suspected beneficiaries in Hyderabad
“Sebi’s surveillance system threw up alerts that transactions of the suspected entities are matching with Quant Mutual Fund’s transactions. How does it match?” said a person close to the development.
The regulator suspects that either a dealer from the Quant or a broking firm through which the fund house places orders was giving out information on the trades that were to be executed by the company.
The regulator as part of evidence collection has seized all digital devices including mobile phones and computers during its search operations.
“Once all the digital devices are examined, Sebi will come to know who was giving out the information.” the person said.
Based on its initial findings, Sebi will question all the suspected individuals who were privy to the trade information of the fund house. The regulator’s focus is on Quant executives who knew the size and execution timing of the orders that were not in public domain and passed on confidential information regarding the impending trade order to the suspected beneficiaries.
Quant’s founder Sandeep Tandon did not reply to specific queries from Chanakya on the matter. However, he has sent a note addressed to investors.
“Recently, Quant Mutual Fund received inquiries from Sebi, and we want to address any concerns you may have regarding this matter,” the note said. “We want to assure you that Quant Mutual Fund is a regulated entity, and we are always fully committed to cooperate with the regulator throughout any review. We will provide all necessary support and continue to furnish data to Sebi on a regular and as-needed basis,” it said.
The fund house manages 27 schemes with its small-cap scheme with assets of Rs.21,243 crore having returned 68% in the last one year.
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