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Synopsis
Earlier this month, the Securities and Exchange Board of India (Sebi) ordered the impounding of INR4,843 crore from US-based high-frequency trading firm Jane Street. The market regulator alleges that the firm manipulated index prices across 21 expiry sessions between August 2023 and May 2025, earning unlawful gains in the process. Over the years, Sebi has established a framework of Investor Protection and Education Funds (IPEFs) aimed at fulfilling this core mandate. These operate at multiple levels: within Sebi itself, through exchanges, and via depositories. At the exchange level, they are designed to compensate investors in case a trading member defaults and lacks sufficient assets to cover claims. Depositories are mandated to maintain similar protection funds. While these safety nets exist on paper, their ability to respond swiftly — especially in complex, large-scale manipulations involving foreign entities — remains untested.
Can victims of Jane Street scam be compensated by IPEFs? Sebi’s investor protection and education funds allow for restitution of ill-gotten gains to affected investors. However, in the case of the Jane Street index manipulation scandal, regulatory experts say compensation is far from guaranteed. With only an interim order in place, and multiple legal and procedural hurdles ahead, actual payouts may be a long and uncertain process. Did the likes
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