The Securities and Exchange Board of India (Sebi) has been urging brokers to step up checks on authorized persons (APs) and reinforce compliance every few months, according to reports from Mint. Sebi has been informally advising brokers to carry out annual checks and surveillance on authorized persons, calling every 2-3 months to reinforce this, said one person familiar with the matter. The regulator does not want APs to engage in unauthorized activities such as promising assured returns and collecting funds from retail investors with the intent of fraud.
India's vast network of over 100,000 authorized persons (APs)—agents who bring clients to brokers and facilitate trades—has been drawing increasing scrutiny as lapses in oversight and social media-driven investing expose retail investors to rising fraud. While the AP framework, introduced in 2009, was intended to deepen market participation, it has created blind spots in supervision as brokers scale through agents. Industry executives say supervising the vast network has become increasingly challenging, with official data on their numbers not publicly available.
Sebi's regulatory push comes amid formal investigations against brokers who failed to control their APs. In November 2025, Sebi fined Angel One ₹300,000 for unapproved trading terminals and inadequate internal audits after APs registered as employees under another AP were found trading among themselves. Motilal Oswal faced a similar ₹300,000 penalty in June 2025 for oversight lapses, including use of unqualified personnel and misuse of client credentials. Stock exchanges have also stepped up engagement, with NSE meeting all brokers a couple of weeks ago to ensure their APs do not engage in fraud.
Investor risks have escalated with social media-driven trading, as reported by Mint. A 2025 survey by Sebi found that 62% of retail investors rely on finfluencers for investment decisions, with many of these influencers operating in close proximity to authorized person networks. Sebi has removed over 100,000 pieces of content for violations and uses artificial intelligence tools to track unregistered investment advice. One high-profile case involved influencer Avadhut Sathe, where Sebi alleged he gave stock tips and engaged in unregistered investment advisory through online classes, resulting in disgorgement of over ₹500 crore for the violations.
APs operate under brokers' control and cannot independently handle client funds or act outside regulatory limits. Sebi regulations restrict APs from working across the board with all brokers, with an AP able to be associated with only one trading member for a given segment and cannot be appointed by multiple brokers on the same exchange. However, as noted by industry experts, surveillance remains difficult as APs can still engage in misconduct without the broker knowing. The challenge lies in supervising such a vast network while maintaining effective oversight across all authorized persons.
