MC Exclusive: SEBI Suspects Front-Running at Sandeep Tandon’s Quant Mutual Fund; Conducts Search and Seizure Operations
Key Points:
– Rapid Growth: Quant Mutual Fund’s assets skyrocketed from Rs 100 crore in 2019 to nearly Rs 90,000 crore currently.
– SEBI’s Actions: The market regulator SEBI conducted search and seizure operations at Quant Mutual Fund’s Mumbai headquarters and another location in Hyderabad.
– Alleged Profits: Suspected front-running operations reportedly netted close to Rs 20 crore in profits.
– Quant’s Response: Quant Mutual Fund acknowledged receiving inquiries from SEBI and affirmed its commitment to cooperate fully with the regulator.
Detailed Highlights:
1. SEBI’s Investigation: The Securities and Exchange Board of India (SEBI) has launched search and seizure operations at Quant Mutual Fund, owned by Sandeep Tandon, amid suspicions of front-running. The operations took place at two sites: Quant Mutual Fund’s headquarters in Mumbai and another location in Hyderabad linked to suspected beneficial ownership, according to sources familiar with the matter.
2. Search Locations: Apart from the Mumbai HQ, the other site under scrutiny was in Hyderabad. This location was connected to the suspected operations through beneficial ownership, a source confirmed.
3. Interrogations: On Friday, individuals associated with Quant, including dealers and other persons connected to the case, were questioned. Moneycontrol has reached out to both the mutual fund and SEBI for comments, and updates will follow as responses are received.
4. Suspected Profits: Sources indicate that the alleged profits from these front-running operations are close to Rs 20 crore.
5. Quant’s Communication: In an email to its investors, Quant Mutual Fund confirmed that it had received inquiries from SEBI. The email stated, “We assure you that Quant Mutual Fund is a regulated entity, and we are fully committed to cooperating with the regulator throughout this review. We will provide all necessary support and continue to furnish data to SEBI as required.”
6. Quant Mutual Fund’s Growth: Founded by Sandeep Tandon, Quant Mutual Fund obtained its mutual fund license from SEBI in 2017. Since 2019, its assets have surged from around Rs 100 crore to over Rs 90,000 crore. The fund crossed Rs 50,000 crore in assets in January this year, managing 26 schemes and 54 lakh folios. Its small-cap fund alone currently manages over Rs 20,000 crore and has been the top-performing fund over the past three and five years, delivering an annualized return of 45% over five years compared to a category average of 31%.
Over the past year, it recorded a return of 69%, against a category average of 55%. Remarkably, in May, 43% of the total inflows into the small-cap fund category went into Quant Small-cap Fund, as reported by Moneycontrol earlier.
7. SEBI’s Crackdown on Front-Running: SEBI has been rigorously targeting mutual funds to eradicate front-running, ramping up its search and seizure operations to uncover substantial evidence. Front-running involves fund managers, dealers, or brokers placing their trades ahead of large client orders to benefit from the expected market movement, often using personal accounts or accounts not in their names to avoid detection. These complex transactions are notoriously hard to trace due to the high burden of proof required by law.
8. Previous Cases: Previously, SEBI barred Viresh Joshi, a fund manager at Axis Mutual Fund, along with 20 associated entities in a front-running case. The regulator identified Rs 30.55 crore as illicit gains from these activities and ordered the amount to be seized. This unfolding story underscores the vigilance required in the financial markets to maintain integrity and protect investors from unethical practices.
Here’s a highlights table summarizing the key points from the article:
| Key Points | Details |
|---|---|
| Rapid Growth | Quant Mutual Fund’s assets grew from Rs 100 crore in 2019 to nearly Rs 90,000 crore presently. |
| SEBI’s Actions | SEBI conducted search and seizure operations at Quant Mutual Fund’s Mumbai headquarters and a location in Hyderabad. |
| Alleged Profits | Suspected front-running operations allegedly yielded close to Rs 20 crore in profits. |
| Quant’s Response | Quant Mutual Fund acknowledged SEBI’s inquiries and committed to full cooperation with the regulator. |
This table succinctly captures the main points of the investigation into front-running at Sandeep Tandon’s Quant Mutual Fund, highlighting the growth of assets, regulatory actions taken, alleged financial implications, and the fund’s official response to SEBI’s scrutiny.
Do follow for more https://notionopia.com/category/business/