I like that Jane Street hires smart people and supports cool initiatives like ocaml.
But don’t fool yourself, they don’t make their money with intelligence.
They just do fees and insider trading.
[1] https://www.reuters.com/sustainability/boards-policy-regulat...
[2] https://www.bloomberg.com/news/articles/2026-02-24/jane-stre...
If you really dive into the mathematics of finance, you quickly realize that the edge is never "we're better at math than you", but a much more fundamental asymmetry in information/control.
Sometimes that's getting information a few seconds faster, sometimes a data source no one else has exploited, but more often than not its something that feels a bit more "unfair".
Company X sued by company Y shouldn't automatically translate to company X did a bad thing. Companies get sued all the time.
Very wrong. Arbitrage is not “insider trading”.
They're accused of opening short positions, then pumping and dumping to trigger the shorts. That's not arbitrage.
What? “Opening short positions then pumping and dumping to trigger the shorts” doesn’t make any sense at all. You’re saying they opened a position that profited if the price went down then they bought to raise the price
You’ve never heard of this strategy before? If i tried to explain it, I would do a poor job, it’s happened a lot, enough that it is forbidden on most regulated exchanges.
In this case they buy slowly to avoid artificially propping up the price, then sell all at once to artificially drop the price, only momentarily. They don’t have to cause the entire price drop through selling everything they acquired, they just have to move the price down enough to trigger stop loss orders that they know about.
With this strategy they can accumulate assets while also taking profits on the shorts. It’s the retail investors who put in market orders or stop loss orders that get taken for a ride.
In their role as market maker they have all the information needed to minimize the risk of this strategy.
By "pumping and dumping" do you mean "buying and selling" to outsmart other people trying to outsmart them?
Did they lie about the financial health of the securities they traded?
You could just read the article.
This is outside my domain, and I don’t know the details, but in many cases Jane street functions as a market maker, market makers have access to information they can exploit to skim from anyone that trades through them, especially retail investors who place market orders.
Pump and dump is a strategy that whales can use to bully smaller traders, not unlike how in poker the smaller your stack is in relation to the minimum bet, the easier it is for someone with a big stack to squeeze you out. This is possible for whales even when they don’t have access to the information that market makers have, and it’s not allowed on many regulated exchanges.
It’s like the reverse of the GameStop short squeeze, except instead of retail investors ganging up, propping up the price to liquidate institutional short positions, it’s an institution using its fat stacks to cause little crashes which they have opened short positions to exploit.
One arm of the firm creates a waves in the price, and the other arm rides the wave.
Please correct me if I’m wrong.
> Please correct me if I’m wrong.
You are, about pretty much all of this.
Being a market maker doesn't provide any special information. I'm guessing someone misunderstood something like Level II quotes (https://www.investopedia.com/articles/trading/06/level2quote...) as being information that hedge funds / investment banks / pros have that retail traders don't... but it's just semi-public information that anyone can pay for access to.
Jane Street also isn't doing pump and dumps, they're not in crypto discord channels hyping some coin or running bot farms of twitter accounts to talk up some stock.
They run several different types of trading that might interact with other people attempting pump & dumps though, which could impact in either direction- plausibly they might do a momentum trade that follows the direction of movement or they might recognize a price discrepancy happening and trade against it.
More accurately, they have complex models pulling in many, many signals to inform trading, and I'm being a bit reductionist to categorize it as these two things.
If it’s so ridiculous then why is this practice specifically forbidden on US regulated exchanges?
Js manages trades for huge whales that can move markets by themselves.
So yes it is textbook insider trading if you are placing options just before you move the whale.
which textbook would that be?
The one that barred from the Indian stock market.
That's not insider trading lol.
It is when you are the market maker as well.