Quant: From frontrunner to alleged front-running

Things have been going swimmingly for Quant AMC. Just ask its investors. Its flagship small-cap fund is invariably the most searched fund on Value Research Online. Not just the small-cap fund, many of its other equity and hybrid funds are category-toppers (or close to it) and have generated healthy alpha in the last few years. Until last month, when the fund house got entangled in SEBI's weeds. On June 23, SEBI (Securities and Exchange Board of India) officials reportedly swooped into Quant's head office in Mumbai and Hyderabad on suspicions of front-running. Not to be confused with being a frontrunner, 'front-running' is an illegal activity in which someone with inside knowledge of upcoming large trades uses that information for personal monetary gains. In the world of mutual funds, front-running typically involves a fund manager, broker, dealer or other insiders aware of a fund's upcoming large stock t