Jane Street vs SEBI: A Battle Over Transparency and Trust

Executive Summary

• In December 2024, SEBI’s Internal Surveillance Department (ISD) cleared Jane Street in 48 out of 54 datasets and recommended closing the case.
• The file was later reopened, and under new SEBI Chairman Tuhin Kant Pandey, Jane Street was accused of “Extended Marking the Close” manipulations.
• A record penalty of ₹4,843 crore was imposed, despite earlier clearance.
• Jane Street deposited the amount in an escrow account but appealed to the Securities Appellate Tribunal (SAT), demanding full access to data, emails, and the original complaint.
• The case raises serious questions about regulatory consistency, transparency, and investor confidence in India’s financial system.

How It Started?

In December 2024, SEBI’s Internal Surveillance Department (ISD) conducted a review of 54 datasets submitted by the National Stock Exchange (NSE).

• Out of these, 48 datasets cleared Jane Street completely, showing no evidence of manipulation.
• The remaining 6 datasets showed only minor gains.

On this basis, ISD recommended that the case be closed. Then SEBI Chairperson Madhabi Puri Buch accepted the recommendation and closed the file.

The Twist: Reopening the Case

Surprisingly, the very same case was reopened later. This time, SEBI officials applied a new theory called “Extended Marking the Close” — an allegation that Jane Street influenced stock prices in the final minutes of trading. Under the leadership of the new SEBI Chairman Tuhin Kant Pandey, Jane Street was slapped with a massive ₹4,843 crore penalty.

Jane Street’s Response

Jane Street deposited the penalty into an Escrow Account but challenged SEBI’s decision by filing an appeal with the Securities Appellate Tribunal (SAT). The firm’s demands are clear:

1. Access to the complete dataset and the underlying analysis used against them.
2. Disclosure of all email communications between SEBI and NSE.
3. A copy of the original complaint that led to their indictment.

The company argues:

• If ISD had already given a clean chit, how can the same datasets later be deemed manipulative?
• Why was the case reopened, and under what circumstances?

The Core Questions

This dispute raises critical questions about regulatory stability and credibility:

1. Regulatory Consistency: Can two SEBI chairpersons arrive at entirely opposite conclusions on the same dataset?
2. Transparency: Why has Jane Street not been given access to the complaint and communications that underpin the charges?
3. Investor Confidence: What message does this send to foreign institutional investors who rely on predictable and transparent regulation?

Broader Implications

• If SAT rules in favor of Jane Street, SEBI’s decision-making and procedural fairness will come under intense scrutiny.
• If SEBI’s position holds, it will set a strong precedent that even global trading firms are not above India’s regulatory framework.

Either way, this case will shape how India’s financial markets are perceived globally, especially among foreign institutional investors.

Conclusion

The Jane Street vs SEBI saga is not just about a fine or a single company. It is about the credibility, transparency, and stability of India’s regulatory ecosystem. Investors and regulators alike are watching closely, for the outcome could redefine how India is viewed as an investment destination.

As the public sentiment captures it well — “Golmaal hai bhai, sab golmaal hai.”