New Delhi: Sebi on Thursday imposed a penalty of Rs 2 crore on Jaypee Capital Services and its managing director for indulging in manipulative practices in the currency derivatives segment at the erstwhile United Stock Exchange of India Ltd (USE).


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The regulator has also slapped a fine of Rs 10 lakh for violation of stock brokers regulations, according to a Sebi order.


A probe conducted by Sebi had found that JCSL along with its managing director Gaurav Arora had indulged in executing large self trades with fraudulent intent to artificially raise the volume in USD-INR contracts and to create misleading appearance of trading in the currency derivatives segment at USE during the inspection period between April and October, 2011.


Sebi in the order said that JCSL had contributed 72.83 per cent of USE's turnover between April and October, 2011 and 82.07 per cent of the turnover of the stock broker was contributed by its self-trades.


The regulator also noted that 59.77 per cent of the total of USE's turnover occurred mainly due to self trades of JCSL.


"The noticees (JCSL and Gaurav Arora) had indulged in executing such large self-trades with an intent to artificially raise the volume/turnover in USD-INR contracts during the inspection period at USE.


"Undoubtedly, indulging into such voluminous self-trading has certainly resulted into creation of misleading appearance of trading in the currency derivatives segment at USE," Sebi said.


The regulator also noted that JCSL had repeatedly indulged into manipulative market practices for a long time which were specifically prohibited under the securities laws and had also failed to exercise due skill, care and diligence in the conduct of its business as a stock broker.


Further, the regulator said that Arora was the main person on behalf of JCSL and was also important link at USE and therefore without his assistance or active involvement, self-trading could not have been possible at all.