Quant Mutual Fund front-running case: What is it and should investors be worried?
Quant Mutual Fund has lakhs of investors worried about the fate of their investments.
While raiding Quant's Mumbai headquarter and the Hyderabad premises of suspected beneficiaries, Sebi has seized mobile phones, computers and other digital devices to find out who was leaking confidential information from the asset management company to make illicit profit.
The hand of either a dealer from a Quant entity or a broking firm through which the AMC places order is being suspected in the case, ET reported.
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Also read | Quant Mutual Fund issues clarification on Sebi probe in front-running case
What is front-running?
Front-running happens when a person, usually an insider or a broker, makes a trade in advance based on privileged information. For example, if a broker who knows that a big client is going to buy a large number of shares of a company and he also buys some shares in his personal account before the transaction is done, then it is a case of front-running.
The practice is not only unethical but also illegal and banned under Sebi regulations.
What happened at Quant Mutual Fund?
Sebi's surveillance system indicated a case of front-running by suspected entities who were privy of what Quant Mutual Fund was going to buy or sell. It is suspected that Quant executives who knew the size and execution timing of the orders may have passed on confidential information regarding the impending trade order to suspected
