SEBI Cracks Down On Quant Mutual Fund On Front-Running Allegations, MF Promises Cooperation: Report

The report cited sources in the know and said the operations were conducted on Friday and Saturday and covered the fund house’s offices in Delhi, Mumbai, and Hyderabad

The Securities and Exchange Board of India (SEBI) conducted a search and seizure operation on the Quant Mutual Fund offices over the weekend. The operations were conducted on suspicions of front-running, media reports revealed.

Responding to the development, Quant Mutual Fund issued an official statement and ensured full compliance with the regulatory, reported CNBC TV18. “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,” the fund house said.

The fund, owned by Sandeep Tandon, assured investors that it remained committed to yield superior-risk adjusted returns. The report cited sources in the know and said the operations were conducted on Friday and Saturday and covered the fund house’s offices in Delhi, Mumbai, and Hyderabad. 

“With over 8 million folios and an asset under management (AUM) of Rs 93,000 crore, our commitment to maintaining investor confidence remains steadfast. We appreciate the trust and support of our investors, and our advanced research capabilities and analytical tools will continue to keep our investors ahead of the curve,” the fund house stated.

The regulator is reportedly investigating allegations of front-running in the fund. Front running is an unethical practice that involves brokers or other insiders involved in trades based on advance information of pending orders from their clients, essentially, manipulating the market. The practice is not only unethical, but also considered illegal and a financial crime as it breaks investor trust and violates market integrity.

Notably, earlier in April 2024, the markets regulator authorised revisions to mutual fund regulations to help set up an institutional mechanism to control front-running and fraudulent transactions. These regulations aimed to keep a tab on such unethical practices.