India’s market regulator has penalized Angel One Limited for weak oversight and internal control failures that allowed unauthorized trading activity, exposing systemic gaps in the brokerage’s supervision framework.
The Inspection That Sparked the Inquiry
The Securities and Exchange Board of India (SEBI) has found serious compliance lapses at Angel One Limited, one of the country’s largest retail brokerages, following a thematic inspection of its authorised persons (APs). Conducted jointly with the National Stock Exchange (NSE), the inspection focused on the use of multiple trading terminals by APs engaged in proprietary trading.
On July 30, 2024, SEBI officials visited the premises of authorised person Ashwin Thakkar, reviewing activities over the six months from January to June 2024. Investigators discovered that six unauthorised users were operating terminals mapped to Thakkar — a violation of exchange circulars issued over two decades. The inspection also revealed that four of these terminals were run from undisclosed locations, breaching stock broker regulations that require transparent reporting of trading infrastructure to the exchange.
Network-Wide Failures and Overlapping Identities
The findings extended beyond Thakkar’s operations. SEBI noted that two other Angel One authorised persons — Vipul Sanghvi and Kartik Tanna — also had access to the same terminals, suggesting intra-brokerage trading among APs, a practice explicitly barred by the regulator.
Upon being alerted, Angel One filed a terminal disablement request with the NSE on August 1, 2024, and sought the cancellation of Sanghvi and Tanna’s AP registrations. But the corrective measures came only after regulators had flagged the violations, highlighting weaknesses in Angel One’s internal monitoring and reporting mechanisms.
Gaps Between Internal Audits and Regulatory Oversight
A striking aspect of SEBI’s order was the mismatch between Angel One’s internal audits and the regulator’s inspection results. The brokerage’s own review of its APs had failed to detect any irregularities, yet SEBI’s team uncovered evidence of structural deficiencies — including inadequate supervision, weak internal controls, and failure to maintain up-to-date records of key financial details.
The regulator also found that Angel One had not updated the revised income and net-worth details of its APs in the unique client code (UCC) database, an essential compliance requirement. Moreover, Ashwin Thakkar was discovered to be an active client of four other brokers — a conflict of interest Angel One should have identified and mitigated under exchange guidelines.
SEBI’s Response and Broader Compliance Context
Citing these lapses, SEBI imposed a penalty of ₹3 lakh on Angel One for supervisory failures and systemic non-compliance. While the amount may appear modest relative to the scale of operations, officials described it as a symbolic warning to large brokerages about the need for stricter internal vigilance.
The episode underscores SEBI’s growing focus on broker accountability amid rising retail participation and increasing automation of trading systems. It also highlights the regulator’s view that even established intermediaries must ensure granular oversight of their networks — where compliance failures, however small, can ripple through the market’s integrity framework.
