Sebi today 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).
The regulator has also slapped a fine of Rs 10 lakh for
violation of stock brokers regulations, according to a Sebi
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,
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
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.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)