Quant MF Schemes NAV Falls Amidst Sebi Investigation

The mutual fund schemes managed by Quant Mutual Fund, currently under investigation by Sebi for suspected front-running, experienced marginal declines in their net asset values (NAV) on Monday.

The Quant PSU Fund, for instance, saw a decrease of up to 1.09 per cent. Meanwhile, small-cap and mid-cap funds saw NAV decreases of 0.66 per cent and 0.94 per cent, respectively.

As of May 2024, two schemes of the fund house have asset sizes exceeding Rs 10,000 crore: Quant Small Cap Fund and Quant Active Fund. The NAV of Quant Active Fund declined by 0.69 per cent on Monday.

The market regulator, Sebi, is investigating a suspected case of front-running involving Quant Mutual Fund, which manages assets worth Rs 93,000 crore. This has raised concerns among numerous investors about the security of their investments.

During recent raids at Quant's Mumbai headquarters and premises in Hyderabad, Sebi seized mobile phones, computers, and other digital devices. This action aims to trace the source of leaked confidential information from the asset management company, allegedly used for illicit gains. The suspected involvement is believed to be linked to a dealer from a Quant entity or a broking firm through which the AMC places orders.

Front-running involves individuals, often insiders or brokers, trading in advance based on privileged information.

For instance, if a broker knows that a significant client intends to buy a large volume of shares and buys shares in his personal account before the transaction, it constitutes front-running. This practice is both unethical and illegal as per Sebi regulations.

Sebi's surveillance system identified a potential front-running case involving entities who had prior knowledge of Quant Mutual Fund's buying or selling plans.

There are suspicions that Quant executives, privy to the order sizes and execution timing, may have leaked this information to potential beneficiaries. Quant Mutual Fund has pledged full cooperation with Sebi and has committed to regularly providing the required data.