MUMBAI: The Securities Appellate Tribunal (SAT) on Tuesday directed the Securities and Exchange Board of India (Sebi) to file its reply within three weeks in an appeal by US-based trading firm Jane Street Investments.
The appeal challenges Sebi’s 3 July interim order barring the firm from trading in India over alleged manipulation of the Bank Nifty index. The challenge marked Jane Street’s first legal move in the matter. The firm is seeking full disclosure of documents it says are essential to mounting a defence against the regulator’s allegations.
“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 a hearing in the alleged index-manipulation case for 15 September. That has now been adjourned following the tribunal’s directive.
Appeal and disclosure dispute
The appeal contends that Sebi withheld full access to materials from earlier probes conducted by the National Stock Exchange (NSE) in November 2024. It also references 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 these 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.
Citing a previous Supreme Court judgment in T. Takano vs Sebi, Darius Khambata, senior counsel for Jane Street, argued that Sebi has a legal duty to disclose relevant documents to ensure a fair trial. The judgment establishes that quasi-judicial authorities must provide all material documents to a noticee, not just those explicitly relied upon in the show-cause notice, if the documents bear on the decision-making process.
“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’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.”
Joshi added that 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.
