In a significant development tied to one of the largest financial probes in recent years, the Income Tax Department conducted search operations on Thursday at the Mumbai offices of US-based trading giant Jane Street and its Indian associate Nuvama Wealth Management. The raids are part of an ongoing investigation into allegations of market manipulation and suspicious fund movements linked to complex derivatives trading strategies.
According to sources familiar with the matter, the I-T Department is specifically looking into whether Nuvama’s custodial and broking services may have played a role in facilitating Jane Street’s controversial trades. These trades were flagged by the Securities and Exchange Board of India in an earlier order as being potentially manipulative, particularly due to their cross-market execution style involving cash, futures, and options.
Nuvama Wealth confirmed the presence of tax officials at its premises, stating in a regulatory filing that a survey was being conducted under Section 133A of the Income Tax Act. The company also added that it is extending full cooperation with the authorities and providing all required information.
The background to this investigation lies in an interim order issued by SEBI on July 3. The regulator accused Jane Street of using complex algorithmic strategies to manipulate key indices in the Indian markets. These strategies, according to SEBI, enabled Jane Street to book illicit gains estimated at more than thirty-six thousand crore rupees between January 2023 and May 2025.
This revelation triggered shockwaves through Indian derivatives markets. Following SEBI’s initial action, a temporary trading ban was placed on Jane Street, leading to a sharp fall in derivatives volumes by as much as twenty to thirty percent in the weeks that followed. The ban was later lifted on July 21 after the firm deposited over four thousand eight hundred crore rupees in an escrow account, complying with SEBI’s directive.
Jane Street, in a statement issued on July 28, reiterated its commitment to maintaining the integrity of India’s capital markets. A spokesperson said the firm was constructively engaging with SEBI and had formally requested an extension to respond to the regulator’s interim order. Despite this, SEBI insiders revealed that Jane Street had previously ignored multiple caution notices, including a cease-and-desist letter sent through the National Stock Exchange early in 2024.
The ongoing tax probe adds another layer to what is already a complex regulatory and legal matter. If the Income Tax Department uncovers evidence of fund diversion, it could potentially lead to additional penalties or restrictions. Market participants are closely watching how this case unfolds, as it could have far-reaching implications on foreign institutional participation, surveillance mechanisms, and risk management frameworks in Indian capital markets.
As the investigation continues, attention will also turn to the role of intermediaries like Nuvama and how brokerage and custody services are monitored when it comes to enabling high-frequency or algorithmic trading activity. The case could spark a review of compliance procedures across the broking industry, particularly when it comes to servicing sophisticated international trading clients.
The coming weeks will be crucial in determining the long-term outcome of this case. Whether the raids lead to more disclosures or tighten enforcement across Indian markets remains to be seen, but the spotlight is clearly on transparency, accountability, and regulatory alignment in one of Asia’s fastest-growing financial systems.
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