THE SECURITIES APPELLATE Tribunal (SAT) admitted Jane Street’s appeal against the Securities and Exchange Board of India’s (Sebi) interim order on Tuesday and directed the latter to file a reply in three weeks explaining why it has not shared the documents requested by the US market maker.
Sebi counsel Gaurav Joshi said that it had already supplied 10 GB of data to Jane Street, adding that the investigation is ongoing, and its scope may be much wider.
“The period maybe significantly larger. The scope of the show cause notice may enlarge significantly more than what is pointed out in the interim order,” said Joshi.
The markets regulator said that lane Street is seeking a “very large list” of documents. He argued that, as per the settled law, Sebi is not required to give more than what it has relied upon.
Further, instead of disclosing its trading strategy, Jane Street is demanding internal administrative circulars such as,the details of the committee which issued the directive for formation of new investigation team, reasons for issuing such directives and the minutes of the meeting in which the decision to form such a team was taken.
The market regulator submitted that the algo trader has not filed its reply yet and is avoiding the hearing. Sebi’s counsel argued that the investigation is at a very critical stage, and the regulator will not give every single document being demanded.
lane Street’s counsel (Darius Khambata) argued that if Sebi can share reports of the NSE, which are not its own documents, then there is no reason it should not share its own documents relied upon to arrive at the regulatory action.
It also questioned the rationale for formation of a new team for investigation when an earlier team had already given them a clean chit. It also asked why Sebi disregarded its previous investigation reports and did not share the copy of the complaint it received from a Dubai based fund manager.
Sebi responded by stating that it has supplied only those documents that are relevant to the case and it is still in the process of passing a confirmatory order.
After Sebi responds, Jane Street can file any rejoinder in another three weeks period. The next hearing of the case will be on November 18 by the SAT, led by justice PS Dinesh Kumar.
Jane Street was represented by Khaitan and Finsec Law Advisors has been teamed in an advisor role. Vidhii Partners are the advocates for Sebi, which is also being advised by K Ashar & Co, The Law Point (TLP), Mansukhlal Hiralal & Co and Agama Law Associates (ALA).
“Jane Street’s immediate move, once Sebi’s response is on record, will be to file its rejoinder and emphasise that denial of access to documents strikes at the core of procedural fairness,” said Ketan Mukhija, Senior Partnerat Burgeon Law.