Quant Mutual Fund
Has been the subject of recent attention due to claims of questionable practices in its investment operations by its fund leaders. Essentially, the Securities Board of India (SEBI) is investigating a potential case of front running by a few investment managers at Quant Mutual Fund.
It has been reported that SEBI carried out searches at the offices of Sandeep Tandon, the owner of Quant Mutual Fund, in both Mumbai and Hyderabad on Friday.
SEBI’s move comes after finding inconsistencies during its routine checks and after receiving reports of issues identified by audit companies following their reviews, which they reported to SEBI.
What is front running?
Front-running is a dishonest and unlawful strategy for making money from the stock market. Typically, front-running or forward trading involves a broker, dealer, or fund manager making trades before they know about a large order from a client, based on insider knowledge.
According to the Securities and Exchange Board of India (SEBI), in the context of front-running, brokers have early access to investor orders. If they use this information to make trades and earn profits in their own accounts, it’s considered unethical.
In simpler terms, a fund manager knows secret details about the stock’s trading activity in a specific company that could greatly affect its stock price on a certain day. The fund manager then uses this information or makes a similar trade in a separate account to profit from the expected price changes.