Synopsis: The Jane Street scandal has raised serious concerns about the lapses during former SEBI Chairperson Madhabi Puri Buch's tenure, highlighting regulatory inefficiencies and failures to act on multiple early warnings. With the new SEBI leadership stepping in, questions loom over how much damage needs undoing.
The Jane Street scandal has sent shockwaves through Dalal Street, not just for the scale of alleged market manipulation, but for exposing deep regulatory loopholes under former SEBI Chairperson Madhabi Puri Buch. With Buch’s term ending in February 2025, questions are now being raised about the missed warnings, technological failures, and policy negligence that allowed one of the world's largest high-frequency trading (HFT) firms to operate unchecked.
The Securities and Exchange Board of India (SEBI) this week banned Jane Street from Indian markets, citing suspected manipulation of indices and derivatives trades between January 2023 and May 2025. The firm reportedly made illegal profits worth Rs 4,843 crore through “pump and dump” strategies, leaving retail investors exposed and devastated.
When Promises Fell Flat
Buch’s tenure, beginning March 2022, came with ambitious goals of AI-based surveillance, enhanced compliance, and investor protection. However, these promises crumbled under the weight of inaction. The National Stock Exchange (NSE) had raised alarms as early as February 2025, following a US court order in April 2024 that accused Jane Street of predatory trading and siphoning off $1 billion annually from Indian markets.
Despite repeated warnings from NSE and global court disclosures, SEBI failed to act—suggesting either regulatory negligence or willful blindness. Market insiders allege that SEBI’s AI tools, lauded as revolutionary under Buch, did not detect any manipulation, allowing Jane Street’s sophisticated algorithmic strategies to flourish.
A Missed Opportunity for Reform
Buch’s critics accuse her of targeting smaller retail players, focusing on over-regulation of low-impact activities while ignoring the systemic risks posed by large foreign quant funds. Her leadership style is now being questioned, with insiders citing a focus on optics over deep reform.
The credibility of her "clean-up" mission is under scrutiny, especially with SEBI under new Chairperson Tuhin Kanta Pandey taking bold steps within months—banning Jane Street and initiating corrective measures.
A Long Road Ahead
The new leadership at SEBI faces a mammoth task—not only to rebuild regulatory trust but also to ensure such massive blind spots don’t reoccur. The Jane Street scandal is more than just financial misconduct; it's a reflection of how vulnerable India’s regulatory mechanisms can be in the face of sophisticated foreign market players.
Disclaimer: This article is based on publicly available data, official statements, and reports from financial and regulatory sources. It does not constitute investment advice. Readers are advised to follow updates from SEBI and other regulatory authorities for further developments.
