SEBI Raids Quant Mutual Fund HQ Amid Front-running Allegations
SEBI has raided the Mumbai and Hyderabad offices in search of leaks.
Front running is a form of market abuse under Article 7(1)(d) of the SEC. Quant Mutual Fund has been accused of doing this.
Quant Mutual Fund has been accused of front-running. Market regulator SEBI is investigating this allegation. Raids were also conducted at the premises of the mutual fund company, in connection to this, in its headquarters in Mumbai. Front running is an illegal activity. Front running, also known as tailgating, means entering into an equity trade, options or futures contracts with advanced knowledge of a block transaction that will influence the prices of the underlying security to capitalise on the trade. This practice is categorised as illegal and is prohibited under Section D of the Securities and Exchange Commission (SEC).
Quant Mutual Fund has been the best-performing mutual fund in the financial market in the country. Within a span of merely four years, its assent under management has gone up from Rs 258 crores to Rs 90,000 crores.
SEBI, the organisation responsible for monitoring and regulating the financial market and the activities that are going on in it in India, post its raid in the offices of Quant Mutual Fund, the investors are raising concerns about whether they should withdraw their money from the fund.
During the raids, SEBI seized mobile phones, laptops, computers and other digital devices from the suspected beneficiaries in the Hyderabad offices. To find out who was leaking confidential information from the company to make an illicit profit. Many advisors are giving their opinions on this matter. They say the investors are currently following the wait-and-watch policy.
A leading broadcaster in financial news, Economic Times, has reported that, the hand of either a dealer from a Quant entity or a broking firm through which the AMC places orders is a suspect in this case. It is suspected that Quant Executives who knew the size and execution timing of orders may have leaked confidential details about impending trade to suspected beneficiaries.
Firoz Aziz, the Deputy CEO of Anand Rathi Wealth, has said that he has also advised investors to wait till the investigation is concluded. He said that traders may promptly react to this situation and take action, but he advises against it.
According to MoneyControl, most investment advisors say that they have not yet started the process of redemption (withdrawing money) on their own and neither have they urged the investors to do so. Prime Investor, which is an advisor for investors on mutual funds and other products, has issued an exit call on all equity and hybrid funds of the Quant Mutual Fund saying that this incident can cause damage to sentiment and impact redemptions.
