So far, Quant Mutual Fund has not made it clear whether it is being investigated for front-running. They have only said that they received inquiries from Sebi. It then released an FAQ that sheds no light on the investigation. The first faq is, “Has the SEBI enquiry concluded? : No, it is a regular ongoing process globally by regulators to collect data and analyze it.”
In this op-ed, SEBI-registered flat fee-only financial advisor Abhishek Kumar discusses why MF unitholders deserve more transparency from AMCs and the regulator.
About the author: Abhishek is part of a freefincal’s curated list of fee-only financial advisors and a fee-only India member. He can be contacted via his website, sahajmoney.com.
His journey has been published earlier: Fee-only Advisor Abhishek Kumar’s tap dancing to financial freedom.
“Sunlight is the best disinfectant.” – Justice Louis Brandeis, former associate of the US Supreme Court.
This is exactly what the public needs from Quant MF management as SEBI investigates it for suspicion of front-running. It would be better if the Quant MF management were more transparent about the ongoing investigation so that the concerns of unitholders and the public could be allayed.
So far, Quant MF management has mostly given generic statements, such as unitholders should not get “capitulated” by market narratives and miss out on investment opportunities. They also assured that unitholders have nothing to worry about, as the fund’s management will continue unaffected, and the schemes remain high in liquidity.
When trust in the system is questioned, such generic statements do nothing but add fuel to the fire. The Quant MF management should make the actual nature of the investigation very clear to the public and unitholders.
When unitholders don’t get transparency in such issues, they start voting with their feet by walking out of the fund. Also, as the regulator, SEBI should give the public more information to maintain trust in the system.
There is also speculation that this issue could be because the AMC employees are highly intelligent but are not paid well compared to other AMCs, leading some to engage in front running. However, this reasoning, if true, does not justify such actions.
I want the management to say, ‘If there is an iota of truth about the front running, then responsible employees and agents would face the full brunt of the law’. Unitholders are minority owners, and protecting their trust should be the paramount concern of AMC management.
In my view, Warren Buffett is not the world’s greatest investor merely because he generated the best returns while running Buffett Partnership or Berkshire Hathaway. Many investors might have done or are doing better in generating returns. He is the greatest investor and steward of minority shareholders because of his best trait: Integrity.
For example, in 1990, there was a major controversy involving Salomon Brothers, a company where Berkshire Hathaway, where Warren Buffett was Chairman, held a 12% stake. Some employees of Salomon Brothers engaged in illegal bidding on US Treasury bonds, and the then-CEO of Salomon Brothers failed to act against the trader. The US Government banned the company from bidding in government bond auctions.
Warren Buffett stepped into the situation, and the US Government reversed the ban because of his integrity. Warren Buffett told the Salomon Brothers employees to instil the fear of strong action if their integrity was compromised: “Lose money for the firm, and I’ll be understanding. Lose a shred of reputation for the firm, and I’ll be ruthless.”
Disclaimer: Recommendations, suggestions, views and opinions given by the author are their own. These do not represent the views of freefincal or its management.
Do share this article with your friends using the buttons below.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
Podcast: Let’s Get RICH With PATTU! Every single Indian CAN grow their wealth!
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
🔥Now Watch Let’s Get Rich With Pattu தமிழில் (in Tamil)! 🔥
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit ‘reply’ to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management, is the narrative. What readers say!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. – Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.
Your Ultimate Guide to Travel
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)