New York-based trading powerhouse Jane Street has found itself at the center of controversy in recent weeks after being barred from India’s securities market by the country's financial regulator.
The Securities and Exchange Board of India (Sebi) has accused the firm of executing a "sinister scheme" and manipulating the stock market in a way that caused retail investors to trade at "misleading and unfavorable prices."
While Jane Street has not commented publicly to the BBC, the Financial Times reported that in an internal email to employees, the company expressed being "beyond disappointed" by Sebi’s decision and intends to appeal the ruling.
Jane Street, a prominent U.S. trading firm, is facing regulatory challenges in India, including accusations of market manipulation by the Securities and Exchange Board of India (Sebi). This action highlights the potential conflicts that can arise when international trading firms operate within the regulatory frameworks of different countries.
India has been a money machine for Jane Street, netting the trading giant more than $4bn in profits in the past two years. However, it is now the source of a scandal that is imperiling the Wall Street firm’s golden run.
The Securities and Exchange Board of India (SEBI) accused Jane Street last week of orchestrating a “sinister scheme” to manipulate Indian stocks and derivatives. In response, the regulator temporarily barred the firm from operating in the country and seized over $550 million in what it described as “illegal gains” — marking the harshest penalty it has ever imposed. SEBI is now broadening its investigation to examine Jane Street’s activities across other segments of India’s financial markets.
In summary, Jane Street has rejected the allegations against it. In an internal memo obtained by the Financial Times, top executives expressed that they were "deeply disappointed" by Sebi’s findings and intended to issue an official rebuttal to what they described as "highly provocative" accusations. Despite the firm's reputation for avoiding financial risk and steering clear of regulatory or reputational issues, its swift expansion and a management setup more suited to a smaller company may have played a role in its troubles in India.
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