United States-based trading firm Jane Street has mounted a sharp legal challenge before the Securities Appellate Tribunal against the market regulator, questioning the integrity of the investigation process that led to regulatory action against it. The firm has alleged that following the issuance of an ex-parte order in July 2025, the Securities and Exchange Board of India generated certain records and reports post facto to shore up its enforcement case. SEBI has firmly dismissed the claim, rejecting the firm’s broad demand for underlying records and maintaining that necessary evidentiary documents have already been furnished.
Origins of the Bank Nifty Index Dispute
The ongoing dispute traces back to an interim directive issued by SEBI in July 2025 concerning suspected market manipulation within the Bank Nifty index. The regulator alleged that Jane Street, acting alongside connected entities, exerted artificial influence over the index by executing coordinated trades across constituent banking stocks and derivative contracts, allegedly securing unlawful gains totaling approximately ₹4,843.57 crore. Jane Street has consistently disputed these findings, arguing before the tribunal that its activity represented legitimate, standard index arbitrage rather than illegal market manipulation.
To build its legal defense, Jane Street has petitioned the appellate tribunal for comprehensive access to prior surveillance material, internal communications exchanged between SEBI and the National Stock Exchange, and foundational investigative files. Legal counsel representing the trading firm submitted that preliminary evaluations carried out by surveillance units at both the exchange and the regulator had initially failed to detect clear indicators of market misconduct.
Contention Over Initial Surveillance Findings
According to Jane Street, access to those earlier findings is essential to understand why the direction of the regulatory inquiry shifted so significantly. The firm had previously informed the tribunal that surveillance reviews conducted by the NSE and SEBI revealed no identifiable correlation between its equity transactions and index fluctuations across 48 of the 53 analyzed time intervals, thereby undermining the allegation that it secured illicit gains through derivative positions.
In addition to supervisory reports, Jane Street has requested granular market data, including order logs, communication trails between the exchange and the regulator, counterparty identities, specific order prices, and order varieties. The firm maintained that the documentation currently provided omits vital trading variables, leaving it unable to evaluate the regulator’s claims adequately or construct an exhaustive reply.
Regulator Cites Delay and Scope Concerns
SEBI opposed the plea during tribunal proceedings, describing the firm’s demand for internal correspondence and historical records as a fishing and roving enquiry intended to stall enforcement proceedings. The regulator stated that its disclosures to Jane Street include all documents on which it directly relies to substantiate the charges, adding that counterparty information and other non-essential data would not be shared. SEBI’s legal representatives argued that statutory enforcement actions cannot be stalled indefinitely while noticees pursue increasingly wide requests for internal regulatory material.
SEBI has since delivered select transaction records containing parameters such as trade timestamps, order volumes, and execution prices, directing the firm to formulate its response around those provided metrics. The tribunal proceedings now hinge on whether the broader regulatory background and initial surveillance records must be shared with the defense, a decision that could clarify procedural transparency standards for future market enforcement cases.
Follow for daily updates on cybercrime, corporate fraud, DFIR, hacking, investigations, and digital forensics
