SEBI’s ₹4,800 crore disgorgement from Jane Street over alleged market manipulation won’t benefit affected retail traders due to the lack of a restitution framework in India.
Indian retail investors hit by alleged manipulative trades by Jane Street will receive no direct compensation, despite SEBI impounding ₹4,800 crore through a disgorgement order, as India lacks a structured restitution mechanism. The regulatory proceeds will instead be routed to the Investor Protection and Education Fund (IPEF) or the Consolidated Fund of India, depriving victims of financial redress.
This stands in stark contrast to regimes in the US and EU, where regulators are empowered to return clawed-back gains to identified victims. In India, restitution remains at SEBI’s discretion and has been rarely exercised post-2006, say legal experts.
🔹 Highlight: ₹4,800 crore disgorged from Jane Street, but no investor compensation due to lack of restitution
🔹 Fund Route: Proceeds to go to IPEF; ₹533 crore corpus, minimal usage in FY24
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Legal Gaps and Past Precedents Raise Concerns
According to Vaibhav Kakkar, Senior Partner at Saraf & Partners, SEBI’s powers under IPEF regulations technically allow restitution, but only where the regulator deems fit. Kinjal Champaneria, Partner at Solomon & Co, added that courts and tribunals can direct such payments, though the mechanism remains highly underutilized.
The lack of a framework for identifying affected investors and calculating proportional losses further complicates any direct relief. Market observers note that SEBI’s calculations often face legal challenges, limiting restitution scope.
🔹 Investor Impact: No payout expected despite penalty; legal action required for individual claims
🔹 Global vs India: US, EU offer formal investor restitution; India relies on IPEF reserve
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