MUMBAI: Four entities of global trading firm Jane Street have moved the Securities Appellate Tribunal (SAT) against the Securities and Exchange Board of India (Sebi), alleging that the regulator withheld crucial information while investigating claims of index manipulation by the group.
In doing so, Jane Street asserted, the market regulator has violated the principles of natural justice, unfairly denying it the opportunity to refute the allegations.
In a sharply-worded appeal, Jane Street’s entities JSI Investments Pvt Ltd, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Traag Ltd asked the appellate tribunal to direct Sebi to release investigative reports and correspondence that they say are essential to their defence.
The appeal challenges Sebi’s refusal to provide full copies of surveillance reports and internal communications, which purportedly gave the trading firm a clean chit and which preceded the market regulator’s ex-parte interim order of July 3. Sebi’s refusal came through two orders, dated August 7 and 22, which have both been challenged in the appeal.
In its 3 July interim order, Sebi barred the US trading firm from trading securities in India, saying some of its strategies were manipulative and caused losses to retail investors. Jane Street was given 21 days to respond.
India’s markets regulator alleged that Jane Street bought large quantities of constituents in the Bank Nifty index in the cash and futures markets to artificially support the index in morning trade, while simultaneously building large short positions in index options, which were exercised or allowed to expire later in the day.
Sebi also ordered the group to deposit ₹4,843 crore in an escrow account, a directive that Jane Street complied with promptly.
Regulator suppressed clearance reports, says Jane Street
According to the appeal, reviewed by Mint, Sebi’s own Integrated Surveillance Department (ISD) and the National Stock Exchange (NSE) had given Jane Street a clean chit after detailed investigations in November 2024.
Both agencies concluded that Jane Street’s trading had not moved index prices in a way that benefited its derivative positions. Sebi’s ISD explicitly recommended that “the matter may not be pursued further.”
“Across 53 patches [time periods], in 48 patches—i.e., in more than 90%—It could not be established that the trading activity of Jane Street Group has attributed to the price movement of the constituents/index in a way which has benefited the open positions of other Group members in derivative segment,” the appeal said, quoting the ISD’s 11 December 2024 findings.
It added that the remaining five patches yielded negligible profits relative to the group’s broader trading. “The report found that the Jane Street entities’ profit pattern contradicted any manipulation theory” the appeal added.
The appeal also alleged that these findings were suppressed when, weeks later, Sebi assigned a separate team to revisit the same trades. The interim order, which followed the investigation, did not mention the earlier clean chits, nor did it explain why the fresh analysis reversed Sebi’s own prior conclusions, Jane Street said in the appeal.
Lack of transparency and due process, says firm
The trading firm has accused Sebi of violating principles of natural justice by denying access to documents.
The appeal asks SAT to direct Sebi to furnish the complete ISD report and annexures, communications between Sebi and NSE, including directions to modify analytical methods, trade and order logs with unredacted counterparty details and the private complaint that allegedly triggered Sebi’s reversal in December 2024.
Jane Street has claimed that these records are vital to prepare a formal response. It says Sebi’s selective disclosure and redactions deny a fair opportunity to rebut allegations—contrary to Supreme Court rulings that require disclosure of relevant investigative material at adjudication.
The rulings also bar “cherry-picking,” except for narrow, reasoned exceptions involving third-party confidentiality or market stability. The firm says Sebi’s August orders denying disclosure “condemn it unheard,” arguing that the selective inspection it received omitted entire sections of notes, blacked-out paragraphs, and missing official pages.
Ketan Mukhija, senior partner at Burgeon Law, said the dispute highlights how SAT routinely deals with disclosure challenges. “After Sebi issues an order, any meaningful challenge to its basis or process, including requests for fuller disclosure, generally proceeds through an appeal to SAT”.
He explained that SAT had repeatedly reinforced due process norms, requiring Sebi to avoid ‘cherry picking’ evidence and to allow inspection of relevant materials.
Sebi justified its interim order by claiming “urgency” after Jane Street’s trades in May 2025 allegedly violated an NSE advisory from February. Jane Street countered that it sought clarity from regulators regarding exposure limits after receiving the advisory, but no such guidance was provided.
The firm points to email trails and inspection notes suggesting Sebi directed NSE to first examine whether a similar pattern persisted after the exchange’s letter to Jane Street entities in February 2025.
When no such instances were identified, NSE was asked to “set aside the objective criteria originally relied upon.” It was only after these criteria were set aside, the appeal claimed, that Sebi was able to formulate the alleged “extended marking the close” pattern relied on in the interim order.
“The circumstances surrounding the shift in Sebi’s approach raise legitimate concerns that regulatory outcomes may have been set in advance, rather than determined through a transparent and objective review of the facts”, the appeal underscored.
Jane Street has asked SAT to set aside Sebi’s August orders blocking disclosures, direct Sebi to provide full and unredacted access to every investigative report, communication, complaint, and trade log relied upon for the interim order, and restrain Sebi from proceeding further until the appeal is heard.
While Sebi’s interim order restrained market access unless ₹4,843.6 crore was placed in escrow, the appeal notes the firm deposited the full amount. It says Jane Street has also refrained from fresh purchases, underscoring cooperation while insisting on access to records needed for due process before the whole-time member hearing.
