Sebi says Jane Street probe could be wider as firm demands release of docs

Jane Street told SAT Sebi ignored its own surveillance report and sought access to NSE communications and regulator emails in the ₹4,840-cr case

The Securities and Exchange Board of India (Sebi) told the Securities Appellate Tribunal (SAT) on Tuesday that its investigation into US-based trading firm Jane Street Group LLC could extend far beyond the July 4 order that imposed a temporary trading ban. Sebi said the probe is at a “critical juncture” and remains ongoing.

 

Sebi also made it clear that it would not share documents that were not used in issuing the July order. “We will not give any documents that we have not relied upon,” Sebi’s counsel told the tribunal, reported Reuters.

 

The court, however, directed Sebi to file a reply explaining why it cannot share additional documents in the case.

 

Make smarter market moves with The Smart Investor. Daily insights on buzzing stocks and actionable information to guide your investment decisions delivered to your inbox.

Subscribe

 

Sebi’s charges against Jane Street

The case stems from Sebi’s July 3 interim order, which accused Jane Street of manipulating the Nifty Bank index. The regulator alleged that the firm bought index stocks in both cash and futures markets to push the index higher, and later unwound those positions while holding large short bets in index options. This led to the firm earning what Sebi called “illegal gains” of ₹4,840 crore.  ALSO READ | SAT admits Jane Street appeal against Sebi in Bank Nifty manipulation case

Jane Street points to gaps in Sebi reports

Jane Street has denied the charge, arguing that the trades were routine index arbitrage.

 

During the hearing, the company pointed out that Sebi’s own surveillance report did not find evidence of manipulation, yet that report was not cited in the July 4 order. It also questioned why two Sebi departments came to different conclusions on the same data.

 

Jane Street sought access to all relevant material, including Sebi’s correspondence with the National Stock Exchange (NSE) and emails with hedge fund manager Mayank Bansal, who reportedly tipped off the regulator. The firm said withholding these documents amounted to a denial of due process. 

 

Trading ban lifted

Although Sebi’s July 4 order imposed a trading ban, the restriction was lifted on July 18 after Jane Street deposited ₹4,844 crore in an escrow account. Despite the lifting of the ban, the firm has not resumed trading in index options. On September 3, it appealed to the SAT, arguing that critical documents had been withheld.

 

The matter is being heard by a three-judge SAT bench led by Justice PS Dinesh Kumar.

 

The tribunal noted that Jane Street’s personal hearing before Sebi would remain stayed until the court takes up the matter again on November 18.

 

(With inputs from Reuters)