Jane Street’s Allegations Against SEBI
On Thursday, senior advocate Darius Khambata represented Jane Street Group in oral arguments before the Securities Appellate Tribunal (SAT). The firm contends that a preliminary examination report relied upon by the Securities and Exchange Board of India (SEBI) was prepared **after** SEBI’s ex‑parte order dated 3 July 2025, and that the report was subsequently used to strengthen the regulator’s case.
Khambata pointed to metadata analysis of the electronic documents, which he said indicated the report was created on 23 July 2025. He described the report as having been “prepared to bolster” SEBI’s position and said the issue would be raised in Jane Street’s rejoinder.
Questioning the Regulator’s Document Request
Jane Street has also challenged SEBI’s demand for a broad set of documents, calling the request a “fishing enquiry.” SEBI’s senior advocate Gaurav Joshi maintained that the matter remains at the investigative stage and that the regulator has not yet concluded its probe. Joshi argued that natural‑justice principles do not obligate SEBI to disclose every document Jane Street deems relevant.
The firm seeks SEBI‑NSE correspondence and other internal material to understand how the criteria used to assess its trading activity evolved. Khambata warned that SEBI could not retroactively change the standards applied to its trading activity, describing such a move as “post‑fact‑um.”
Background on the Interim Order
The dispute stems from SEBI’s 3 July 2025 interim ex‑parte order, which alleged that Jane Street and related entities engaged in manipulative trading involving Bank Nifty constituent stocks, futures, and options. Jane Street denies the allegations.
In July 2025, the firm halted trading and deposited Rs 4,843.5 crore with the regulator. It also claims that its representatives held multiple calls with regulators in August 2024 and presented a video explaining its index‑options strategies on 18 October 2023 and 17 January 2024—submissions that Jane Street says were not considered by SEBI.
Regulatory Clarifications and Thresholds
Khambata highlighted SEBI’s February 2025 inter‑departmental report, questioning why the regulator had not disclosed the Rs 500 crore threshold for a “large” delta exposure when Jane Street had asked for clarification. The firm argues that the threshold is “abysmally small” compared with international markets and that SEBI’s lack of transparency forced it to halt trading for two weeks.
The firm also challenged the introduction of the concept of “extended marking the close,” a novel idea that had not appeared in SEBI’s earlier reports but was included in the ex‑parte order.
Next Steps
With oral arguments concluded, the SAT is expected to reserve its decision on 21 October after receiving written submissions from both parties. The case is not yet about the alleged manipulation itself but focuses on Jane Street’s request for documents and data to prepare its defence.
SEBI has supplied 10 GB of data and claims to have shared all documents on which it relied. Whether the tribunal will side with Jane Street’s claim that the report was post‑order remains to be seen.
Implications for Market Transparency
The outcome will have implications for how regulatory investigations handle evidence that may be produced after an initial order. It also raises questions about the extent to which regulators can request documents during the investigative phase and the balance between transparency and procedural fairness.
For traders and market participants, the case underscores the importance of clear regulatory guidelines on thresholds for large positions and the procedures for documenting and responding to regulatory inquiries.