Tax officials in India conduct an inspection of documents at the offices of Jane Street and local partner Nuvama, according to confidential sources.
U.S. Trading Firm Jane Street Faces Probe by Indian Authorities
Indian income tax authorities have launched an investigation into U.S. trading firm Jane Street and Nuvama Wealth, a domestic trading partner, over allegations of tax evasion, market manipulation, and treaty shopping via Mauritius.
The probe, which involves verifying Jane Street's profits, potential tax losses, and the role of Nuvama as Jane Street's domestic trading agent, was triggered by findings by the Securities and Exchange Board of India (SEBI). SEBI accused Jane Street of manipulating stock indexes by placing simultaneous bets in cash and derivatives markets, resulting in impounded gains exceeding Rs 4,843 crore.
The authorities conducted survey operations at multiple broking companies, including Nuvama Wealth, to investigate Jane Street's activities linked to the market manipulation and tax evasion allegations. Tax authorities are also examining alleged treaty shopping practices by Jane Street using Mauritius-based structures to avoid taxes.
In response to the allegations, Jane Street has denied the claims, calling the trades basic arbitrage. The firm has also deposited $567 million in an escrow account with the intention to resume trading while reserving its legal rights.
Nuvama, in a statement addressed to the exchanges, confirmed that it is cooperating with the authorities and sharing necessary information. However, no response was received from emailed queries sent to Nuvama, Jane Street, or India's tax authorities.
The investigation has had an impact on Nuvama's shares, with the company's shares closing 2.33% lower on Thursday in a weak broader market. The income tax authorities are also reviewing documents across the local offices of trading partner Nuvama Wealth.
The temporary ban on Jane Street by India's markets regulator on July 4 is part of a wider probe into the U.S. trading firm by Indian authorities. The sources of the information are unauthorized to speak to media.
- The investigation by Indian income tax authorities encompasses examining Jane Street's profits and potential tax losses, as they seek to understand the firm's trading activities and the role of Nuvama Wealth in this regard.
- The market manipulation allegations against Jane Street involve charges of manipulating stock indexes, as the firm reportedly placed simultaneous bets in both the cash and derivatives markets to generate impounded gains.
- Despite denying the manipulation claims, Jane Street has deposited a large sum of money in an escrow account, suggesting a potential concern for the financial implications of these allegations on the firm's position in the business and finance sectors.
