SEBI Imposes Fine on Eastern Financiers as Adjudication Reveals Massive Lapse in AP Supervision and Trade Confirmation Records

SEBI Imposes Fine on Eastern Financiers as Adjudication Reveals Massive Lapse in AP Supervision and Trade Confirmation Records​

The Securities and Exchange Board of India (SEBI) has imposed a penalty on Eastern Financiers Limited, finding it guilty of multiple serious compliance breaches concerning its Authorized Persons (APs). The Adjudicating Officer concluded that the stock broker failed to maintain adequate supervision over its Associated Persons (APs) and violated several regulations related to trade confirmation and operational integrity.

The penalty was levied under Section 15HB of the SEBI Act, with the Order emphasizing the seriousness of the procedural failures identified during a joint inspection by regulators and BSE Ltd.

Critical Operational Failures Identified During Inspection​

The adjudication order highlighted six key violations against Eastern Financiers Limited. First, three APs—Ms. Jonaki Biswas, Mr. Rohit Kumar Jain, and Mr. Hitesh P Sanghvi—were found to have failed to maintain pre-order trade confirmations for trades conducted through them. This violated clauses 35.2 and 35.4 of SEBI Circular dated June 17, 2025.

Furthermore, the inspection revealed that CTCL terminals were often operated by unapproved users at various AP locations, including Mr. Anil Shukla and Mr. Madhusudan Mondal. This constituted a violation of Regulation 26 (xix) of Brokers Regulations.

Breaches Related to Certification and Segregation​

A significant aspect of the case involved mandatory certification requirements. It was established that Ms. Jonaki Biswas and Mr. Lakshman Kumar Bihani did not possess the requisite NISM Series VII certification, violating SEBI Notification dated December 10, 2010. The Noticee had admitted this lapse during subsequent proceedings.

The inspection also uncovered a failure to maintain proper segregation of CTCL terminals between two different trading members operating from the same premises. This issue related directly to clients and APs of M/s. Finwell Global Services and Master Capital Services Limited sharing operational space, violating clause 33.7.2 of SEBI Circular dated June 17, 2025.

Failure in Address Management and Client Notification​

Another established violation involved the management of an AP’s location. One CTCL terminal was not found at its registered address during inspection, operating instead from an unregistered location. This lapse related to a failure by the Noticee to ensure that clients mapped to the AP were notified at least thirty days before the change in address, contravening clauses 33.5.1 (a) and (b) and 33.7.4 of SEBI Circular dated June 17, 2025.

Regulatory Shortcomings and Penalty Imposition​

The Adjudication Officer found that the Noticee had failed to maintain adequate supervision of its APs. The stock broker admitted these lapses after the inspection was conducted by SEBI and BSE Ltd. The regulatory body noted that merely establishing a supervisory framework on paper is insufficient; an effective mechanism capable of ensuring actual compliance must be demonstrated in practice.

In view of the multiple established violations, including lack of supervision and operational irregularities across different APs and aspects, SEBI imposed a penalty. Eastern Financiers Limited has been fined ₹4,00,000/- (Rupees Four Lakh Only) under Section 15HB of the SEBI Act.

The company is required to remit this amount within 45 days of receiving the order. Failure to comply with the payment deadline may result in recovery proceedings being initiated under Section 28A of the SEBI Act, including attachment and sale of movable and immovable properties.