A U.S.-based investment manager, Jane Street, has deposited ₹4,843.6 crore into an escrow account in compliance with an interim order of the Securities and Exchange Board of India (SEBI), issued late last week, on purported market manipulation. Jane Street acknowledges the transfer was made “without prejudice” to any legal rights and has formally requested SEBI to provide some relief from the restrictions.
In response, SEBI said it is considering the request but clearly stated that the payment is not an admission of guilt. Legal experts pointed out that this action does not prevent SEBI from imposing any sanctions under the Prevention of Fraudulent and Unfair Trade Practices (PFUTP) Regulations, including possible monetary penalties or actions before the Securities Appellate Tribunal (SAT).
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Jane Street may have a defence that its trading strategy was algorithmic and made with public data, which showed there was no intent to manipulate, said Sonam Chandwani with KS Legal & Associates. But the consensus among market participants seems to indicate a level of disbelief.
One derivative trader, Preeti K Chabra, condemned the trades as “engineered arbitrage”, which she views as manipulation rather than genuine trading.
Ultimately, legal clarity could rest with the SAT, but SEBI’s use of its investigative action has sent a strong message that the regulator is keeping track of high-speed, high-frequency trading activity.
