Quant Mutual Fund has informed its investors that the market regulator's data collection was not in the nature of routine enquiry but was part of a court-approved search-and-seizure operation.
The mutual fund has sent an email to its investors on July 13.
Moneycontrol was the first to report that the Securities and Exchange Board of India (Sebi) officials had done a search-and-seizure operations at the mutual fund house, as part of an investigation into suspected front-running of trades.
Following this, Quant had written to its investors that it has received "inquiries from Sebi". It also later sent another letter to investors answering their Frequently Asked Questions (FAQs), in which the mutual fund house had said that the Sebi enquiry was a "regular ongoing process globally by regulator to collect data and analyze it".
The latest communique from the mutual fund house to its investors is a clarification to this answer, which was given to the first question in the FAQs.
In the latest email, the mutual fund house has said, "This has reference to question 1 of the FAQs in the trailing email. We have been receiving further queries in this regard. We would like to clarify that the data collected by the regulator was not part of any regular process but was part of a court approved search and seizure operation with respect to an ongoing investigation initiated by SEBI.”
Moneycontrol had written that Sebi's search and seizure ops are more serious than standard inquiries from a regulator.
Legal experts told Moneycontrol that search-and-seizure is more serious than standard inquiries from the regulator, and that the former can involve more intrusive examinations and may imply more serious allegations.
Also read: MC Explains: Why are Sebi’s search-and-seizure ops more serious than routine inquiries?
In an earlier interaction explaining the search-and-seizure operations, Vasudha Goenka, partner at law firm Cyril Amarchand Mangaldas, had said, "A search and seizure operation is carried out pursuant to the investigating authority of SEBI obtaining an order of the magistrate or judge of the designated court under Section 11C (9) of the SEBI Act.”
She added, "A search-and-seizure operation is considered more serious than getting inquiries from SEBI as it grants the investigating authority lawful power to enter the premises where records/documents are kept, search such premises and seize documents as deemed necessary by the investigating authority as part of the investigation, and keep them in his custody till the conclusion of investigation. This is unlike other inquiries where the investigating authority seeks specific information/documents from a person."
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