MUMBAI: At a hearing on Tuesday, the Securities and Exchange Board of India (Sebi) told the Securities Appellate Tribunal (SAT) that Jane Street’s demand for extensive documents was premature, arguing that the investigation into alleged index manipulation was still at a critical stage.
Sebi maintained it was under no legal obligation to share internal reports, draft findings, or confidential correspondence not relied upon in its ex-parte interim order, and refused to accede to what it called a “fishing and roving enquiry.”
The regulator argued Jane Street was attempting to stall the proceedings rather than explain its trading strategies.
Following the exchanges, SAT directed Sebi to file its reply within three weeks.
“The appellant (Jane Street Investment) states that it has complied with the direction specified under the Sebi order. In order to file a reply, Jane Street has sought disclosure of further documents from Sebi to defend its stance in the matter. Sebi’s stand, however, is that it will not provide any further documents to Jane Street as it is not required under the law,” justice P.S. Dinesh Kumar said in his oral order.
Sebi had scheduled an internal hearing in the case for 15 September. That session will now be adjourned.
Appeal and allegations
Jane Street’s appeal—its first legal move in the matter—contends that Sebi withheld crucial information while investigating claims of Bank Nifty index manipulation.
The firm’s entities asked SAT to direct Sebi to release investigative reports and correspondence they say are essential to their defense.
The appeal points to earlier probes, including a November 2024 review by the National Stock Exchange (NSE) and a December 2024 review by Sebi’s Integrated Surveillance Department (ISD), which reportedly found no evidence that Jane Street’s trades influenced index prices to benefit its options positions and advised against pursuing the matter further.
Despite those findings, Sebi’s July order accused Jane Street of executing strategies that distorted the Bank Nifty index and harmed retail investors. The regulator alleged that the firm bought large quantities of Bank Nifty constituents in cash and futures markets to artificially support the index while simultaneously building short positions in index options. Jane Street was asked to respond within 21 days.
Arguments over disclosure
In Tuesday’s hearing, Darius Khambata, senior counsel for Jane Street, cited the Supreme Court’s T. Takano vs Sebi ruling, which held that quasi-judicial authorities must provide all relevant and material documents to a noticee, not just those explicitly relied upon in a show-cause notice, if the documents bear on the decision-making process.
Khambata questioned Sebi’s reversal, noting that within 20 days of the ISD’s clean-chit report, the regulator commissioned a new team based on a complaint from a UAE-based fund manager. He called this a “fundamental departure from its own findings” and criticized Sebi’s justification for withholding documents as a fear of “confusion.”
He stressed the serious reputational damage caused by allegations of manipulation and fraud. “When you make such serious allegations, this affects my international reputation. It is a stigma,” Khambata argued, accusing Sebi of attempting to “have it both ways”—by condemning the firm publicly while refusing to provide the material needed for a defence.
He also described the interim order requiring Jane Street to deposit over ₹4,800 crore as “harsh and disproportionate,” arguing a smaller firm could be driven out of the market. “Just because they have made a profit doesn’t mean there is something wrong,” he said. “My group entities are astute traders.”
“I am entitled to see those complaints…What is so significant in the complaint made by the hedge fund why mask the information?” Khambata pointed out.
Sebi pushes back
Sebi’s counsel, Gaurav Joshi, countered: “We will not provide any further documents in the matter as it is not required under the law. Some material is confidential…the ex-parte order has been passed, and pending an investigation, the scope of the show-cause notice may be even more.”
He said the investigation remains at a critical stage and a show-cause notice has not yet been issued. “We cannot give all the documents that they have demanded. This cannot be a ‘fishing and roving enquiry,’” Joshi told the tribunal.
He added Jane Street must demonstrate why the ex-parte order should be vacated and explain its trading strategy.
In its appeal, Jane Street noted that both NSE and ISD reports examined several of the same trading dates later flagged by Sebi, yet neither found evidence of manipulation. The firm has questioned how Sebi’s internal team reached an opposite conclusion using largely the same data.
The ISD’s 11 December 2024 findings showed that in 48 of 53 time patches studied—over 90%—Jane Street’s activity could not be linked to price movements that benefited its positions. In the remaining instances, alleged profits were “negligible” compared with the firm’s overall trading book.
Jane Street has requested that SAT direct Sebi to disclose the full ISD report, all correspondence with NSE (including discussions about modifying or discarding earlier criteria), materials tied to the complaint that triggered Sebi’s re-examination, and detailed order- and trade-log data to verify Sebi’s patch-by-patch claims.
The firm contends that selective disclosure and redactions violate Supreme Court rulings, which prohibit “cherry-picking” of documents except in limited cases involving third-party confidentiality or market stability.
Jane Street, meanwhile, has deposited ₹4,843.6 crore in escrow to regain market access, complying with Sebi’s interim order. It has also refrained from fresh purchases, citing cooperation while seeking access to the records necessary for a fair defence before Sebi’s whole-time member.