Jane Street hits back at Sebi’s allegations, says ‘regulator changed the goal posts’

Mumbai: Jane Street on Thursday questioned the capital-market regulator's characterisation of the Wall Street trading major's conduct in its ongoing probe into an allegedly manipulative trading strategy, with the firm's lawyer telling the Securities Appellate Tribunal (SAT) that it wanted a quick resolution of the case. "Why on earth would I want to adopt dilatory tactics? My money is at stake. My reputation is on the line," Jane Street counsel Darius Khambata told SAT, arguing that the firm had no reason to delay the matter.

He said the firm had deposited the money sought by the Securities and Exchange Board of India (Sebi) even without being given an opportunity to be heard, describing the action as an ex-parte order.

Jane Street, he added, had gone further and stopped its trading activity in the country.


He also challenged the regulator's focus on the scale of Jane Street's trading. "Largeness of trading doesn't mean manipulation. Why is Sebi scared of large trading?" he asked.

Read more: Market Trading Guide: Deepa Jewellers among 2 stock recommendations for Friday

Khambata pointed to a detailed 12-page note submitted by Jane Street on August 30, 2024, explaining its trading strategy.

According to Khambata, Jane Street had explained its strategy to Sebi and the National Stock Exchange before the exchange and investor surveillance department reports were prepared. The firm had multiple calls with NSE and Sebi officials to explain the strategy.

"These are global practices of hedging," he said, adding that Jane Street had engaged with Sebi extensively and had "nothing to hide".

"A regulator is always put to test. They should be proud of that if they are tested," Khambata said.

Read more: RBI rate hike done. Now what’s ahead for bank stocks? Jefferies, other brokerages weigh in

He accused Sebi of changing the "goal posts" post facto in its case against the global trading firm.

"Don't change the rule post facto. What is so secret about the communication between Sebi and NSE? That's part of my defence. You have changed the goal post now," Khambata told the tribunal.

Sebi had received 42 complaints in the matter, Khambata said, questioning why the regulator had refused to disclose the identities of complainants.

"This is untenable," he said. He also objected to Sebi masking counterparty details in documents shared with the firm.

"We have not asked for everything under the sun. Sebi can't cherry pick the document," Khambata said.

The senior counsel also argued that Sebi's order had significant civil consequences because Jane Street was directed to stop trading unless it deposited money.

"Any order which has civil consequences is adjudication," Khambata said, adding that the right to a fair hearing was a constitutional right.

Khambata said the deposit order was the largest of its kind issued by Sebi.