Jane Street whistleblower: SEBI fine needs to be higher than illicit profit for deterrence

India’s capital markets regulatory Securities and Exchange Board of India (SEBI) needs to take stringent action against violators like Jane Street Group for it to serve as a deterrent, whistleblower Mayank Bansal, President of UAE-based hedge-fund said in an interview with CNBC Awaaz.On July 3, SEBI interim order barred Jane Street and related entities from accessing the securities market. The four entities of Jane Street made a combined profit of over ₹36,500 crore. The profits were analysed starting January 1, 2023, until March 31, 2025, according to the order.
The indications of market manipulations were spotted early on, and one of the first instances of Jane Street earning significant profits was in 2023, Bansal said.
Jane Street’s conduct involved maintaining options expiry in a ‘strict range’ and this had a noticeable impact on the NSE’s Nifty50 index. The fraudulent conduct which began in July 2023, started with mid-caps and this continued until April 2024.It was only in April 2024 that the scale of Jane Street’s market manipulation intensified and continued to rise there onward, Bansal said. An official complaint regarding the conduct was sent to SEBI via email in May and the regulator promptly took cognizance of the matter.
However, despite the complaint, Jane Street carried on with its conduct unabated and the Group’s activities even impacted the NSE sending shockwaves at the Nifty50 index, Bansal said.Also read: Jane Street Group restrained from accessing securities market by SEBI, ₹4,843 crore to be impounded

By then, market participants had become aware of the possibility of options expiry manipulation, but Jane Street feigned ignorance to the rules. The company’s entire conduct during the period was in violation of SEBI rules, Bansal said.

So far the SEBI has evaluated Jane Street’s infringement only at the NSE and it is yet to assess the company’s conduct vis-à-vis option expiry at the BSE, according to the whistleblower.

Citing examples of stringent actions violators by the US regulator – Securities Exchange Commission – Bansal called going as far as initiating criminal prosecution against Jane Street for it to serve as a deterrent, Bansal stressed. The fine amount needs to be higher than the alleged illegal profits earned by the violator, he added.

Meanwhile, Jane Street has said that it disputes the findings of the SEBI interim order and will further engage with the regulator.

Jane Street Group LLC is a global proprietary trading firm and employs more than 2,600 people in five locations across the US, Europe and Asia, trading in over 45 countries. It uses algorithms to identify trading opportunities in the market.