Nuvama shares fall 4% on reports of income tax search in connection to Jane Street case

Shares of Nuvama Wealth Management fell nearly 4% on Thursday to hit a low of Rs 7,139.50 on the NSE after reports that the Income Tax Department was conducting search operations on its premises. The search was being carried out in connection with the Jane Street market manipulation case.

Nuvama, Jane Street’s domestic trading partner, has found itself caught in the regulatory crossfire, triggering investor anxiety despite no direct accusations against the firm.

In a statement issued by Nuvama today, the company said that the income tax department conducted a survey today at its registered office.


"The company is extending full co-operation with the authorities and sharing requisite information. The survey is yet to be concluded. The
Company will make requisite disclosures, if any, to the stock exchanges under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company continues to operate business as usual," the statement said.

The global proprietary trading powerhouse has sought more time from the Indian market regulator Securities and Exchange Board of India (Sebi) to respond to the interim order issued on July 3 against alleged market manipulation case.

On July 21, Sebi had given conditional relief to U.S. trading company by allowing them to access the securities market and carry out trading activities. Sebi's conditional relief came after Jane Street created a Rs 4,844 crore escrow account.

The trading company has also been allowed to use its bank accounts for debit purposes.

The Nuvama link

While SEBI’s order did not name Nuvama Wealth Management in the alleged misconduct, the firm’s connection to Jane Street as its on-ground trading partner in India was enough to spook investors. Nuvama had responded to the NSE’s earlier investigation into Jane Street’s trades, which the exchange closed in May. However, SEBI chose to proceed independently with a more forceful stance.

Jane Street case

Jane Street, one of the world's most sophisticated trading firms pulled off a Rs 36,500 crore market scam making a whopping Rs 43,289 crore option profits while deliberately losing Rs 7,208 crore in futures and equities.

The market watchdog in a 105 page order issued on July 3, had imposed comprehensive interim restrictions on Jane Street pending detailed investigation. Jane Street entities are completely restrained from accessing securities markets and prohibited from buying, selling, or dealing in securities directly or indirectly.

The regulator had also ordered impounding of Rs 4,843.57 crore in unlawful gains, requiring Jane Street to deposit this amount in an escrow account with a lien in favor of SEBI. All bank accounts, demat accounts, and custodial accounts are frozen, with no debits allowed without SEBI permission (though credits can be accepted).