The Securities and Exchange Board of India (SEBI) recently told the Securities Appellate Tribunal (SAT) that US-based trading firm Jane Street and its group entities have been provided with enough material to counter accusations of manipulating the Bank Nifty index. This assertion comes amidst an ongoing legal dispute where SEBI issued an interim order on July 3, accusing Jane Street of employing a two-part trading strategy to unlawfully gain approximately ₹4,843 crore.
SEBI's Stance on Disclosure and Burden of Proof
During a recent hearing, SEBI's counsel emphasized that Jane Street's focus should be on explaining the 'manner, strategy, and rationale' behind its trades, rather than seeking additional documents from the regulator. SEBI stated it had already shared not only the material referenced in its interim order but also over 10 GB of data with the firm. The regulator argued that the dispute was increasingly shifting from the core trading behavior to the investigative process itself.
SEBI maintained that the burden of proof lies with Jane Street to demonstrate that its trading activities did not constitute market manipulation. The regulator also clarified that the matter is still in the investigation stage, and as such, it is not obligated to provide every document in its possession. Only documents directly cited and relied upon in the interim order are required at this juncture.
Jane Street's Defense and Demands
Jane Street has vehemently denied SEBI's allegations, contending that its trading activities were legitimate index arbitrage, a conventional strategy, and not market manipulation. The firm previously had a temporary ban from trading in India, which was lifted on July 18 after it deposited the alleged gains into an escrow account.
In its defense, Jane Street's lawyers told SAT that movements in some Bank Nifty stocks contradicted the firm's trading positions, thereby undermining SEBI's manipulation claims. The firm has also sought access to further documents, including SEBI's Integrated Surveillance Department report and correspondence between SEBI and the National Stock Exchange (NSE), as it challenges the findings of the interim order. SEBI, however, has argued that Jane Street's demand for more information is delaying the completion of the ongoing investigation.