'It was like real estate at ₹100': Hedge fund boss claims he tipped off SEBI on Jane Street

The Securities and Exchange Board of India’s (SEBI) sweeping action against U.S.-based trading firm Jane Street — which includes a market ban and seizure of ₹4,844 crore — may have been set in motion by a whistleblower.

Mayank Bansal, president of a UAE-based hedge fund, claims he tipped off the regulator months before the July 3 crackdown.

Speaking to CNBC Awaaz, Bansal said he began noticing “coordinated distortions” in expiry-day trades as far back as July 2023, particularly in the BANK NIFTY and midcap segments.

“By January 2024, it was clear something wasn’t right,” he said. According to Bansal, the trades involved lifting index levels using bulk purchases in banking stocks like HDFC and ICICI, triggering a surge in retail call buying. Then, Jane Street would reverse its positions—offloading calls, buying puts, and dumping the stocks—causing the index to crash and retail positions to evaporate in value.

Bansal claimed the strategy only intensified in 2024, and in a detailed account to The Hindu, he explained how the alleged manipulation unfolded through two distinct expiry-day setups. In the first, a “quiet expiry,” the firm would heavily sell at-the-money options, crushing their value by lowering implied volatility, and then keep the index tightly range-bound—ensuring the options expired worthless. The second, a “volatile expiry,” involved buying large volumes of options on one side (typically calls), pumping up their prices irrationally, and then triggering a steep directional move in the cash segment to profit massively from the inflated instruments.

“The distortion was insane,” Bansal told The Hindu. “It was like real estate going for ₹100 one day, and water priced at ₹1 lakh the next.” By December 2024, with Nifty regularly swinging 2% intraday, Bansal says he submitted a formal presentation to SEBI, outlining the trading patterns and their potential regulatory breaches. SEBI Wholetime Member Ananth Narayan, who later signed the interim order against Jane Street, responded personally and invited him for an in-person meeting at SEBI Bhawan in Mumbai. “Since then, I’ve stayed in touch, flagging anomalies as they continued,” Bansal added.

He alleged these weren’t just aggressive high-frequency strategies but calculated attempts to manipulate expiry pricing—violations, he said, of India’s Unfair Trade Practices Act. “This was not market movement—it was calculated manipulation,” Bansal stated. “SEBI must act decisively so this doesn’t happen again.”

While Bansal’s account has gained traction, BT could not independently verify the claims made by the reported whistleblower.

On July 3, SEBI barred Jane Street from participating in Indian securities markets, citing manipulation of stock indices through large derivative bets—mainly in BANK NIFTY. The regulator said these trades caused significant harm to retail investors and ordered the seizure of ₹4,844 crore ($570 million) in what it described as “illegal gains”—likely the largest such enforcement action in its history.