Caught in SEBI’s net, Jane Street calls manipulation charges “erroneous” in leaked memo

U.S.-based trading firm Jane Street is gearing up to contest India’s allegations of market manipulation, after the Securities and Exchange Board of India (SEBI) barred the firm from trading and froze over ₹4,840 crore in alleged illicit gains linked to expiry-day trades in the Bank Nifty index.

SEBI’s sweeping order, issued Friday, accuses Jane Street of distorting market prices by buying up large quantities of Bank Nifty constituents to inflate the index, while simultaneously profiting through short positions in index options. The regulator’s action includes a trading ban, asset freeze, and instructions to banks to halt any debits from Jane Street’s accounts without prior approval.

Jane Street has pushed back hard, calling SEBI’s charges “extremely inflammatory” and “erroneous.” In an internal memo to its 3,000 employees—leaked to the Financial Times—senior management said the firm is “working on a formal response” and claimed it had made “ongoing efforts to communicate with SEBI” since February, which were “consistently rebuffed.”

But SEBI’s crackdown follows months of surveillance by the National Stock Exchange, which had warned Jane Street in February 2025 to steer clear of disruptive strategies. 

The exchange’s early findings and caution letter formed part of the evidence base for SEBI’s 105-page interim order, which includes forensic data, expiry-day trading breakdowns, and alleged pattern manipulation.

As SEBI widens its investigation to other indexes and exchanges, the regulator has made clear its intent to tighten oversight of India’s derivatives market, especially in the face of increasingly aggressive high-frequency strategies from global firms like Jane Street.

Despite its denial of wrongdoing, Jane Street now faces mounting regulatory scrutiny and a freeze on one of its most profitable foreign trading operations.