SEBI Imposes ₹3 Lakh Fine On Angel One For Regulatory Lapses, Failing To Supervise Authorized Persons

The Securities and Exchange Board of India (SEBI) on Tuesday imposed a penalty of ₹3 lakh on stock broking firm Angel One Limited for multiple regulatory lapses, including operating trading terminals from unapproved locations and failing to properly supervise its representatives, known as Authorized Persons (APs).

Adjudicating Officer Jai Sebastian observed that, as the broker, Angel One is fully responsible for the actions of its APs.

"I note that the stock broker is responsible for all acts of omission and commission of its APs and/or their employees, including liabilities arising therefrom. The Noticee, being a stock broker, is duty-bound to ensure that its APs abide by all applicable laws. It is a serious activity to be undertaken by the Noticee and cannot be dismissed as a casual exercise.," he said.

The case arose from a joint inspection by SEBI and the National Stock Exchange of India for the period January to June 2024, focusing on AP Ashwin Thakkar. The inspection uncovered several lapses. 

Four terminals were found operating from locations different from those reported to the exchange. Additionally, two APs of Angel One were found accessing each other's terminals. The inspection also highlighted that internal audits by the company had not detected these violations.

Angel One defended itself, arguing that some of the lapses were inadvertent and arose from the actions of its APs. The company said that net-worth updates had been correctly recorded on the BSE portal and that it relied on AP undertakings to prevent dealings with other brokers.

While SEBI accepted Angel One's explanation that the particular error was an input error which was promptly corrected, the regulator noted that Angel One had failed to prevent other lapses. 

"In view of the foregoing, it is concluded that the Noticee has failed to bring on record any justifiable reason with respect to the aforesaid violation alleged in the SCN. It is, therefore, established that trading terminals mapped to AP - Ashwin Thakkar were operated by six unapproved/unauthorized users. Consequently, the Noticee had violated the provisions of NSE Circular dated August 29, 2002, NSE Circular dated September 25, 2002, NSE Circular dated April 13, 2017, NSE Circular dated May 22, 2023 and clause 9(vii) of NSE Circular dated June 02, 2023 read with regulation 9(b) of the Brokers Regulations, clause A(5) of Schedule II of Brokers Regulations read with regulation 9(f) of Brokers Regulations and regulation 26(xix) of the Brokers Regulations."

It also noted that although Angel One took corrective actions by disabling the trading terminals on August 1, 2024, and cancelling the AP registrations on August 13, 2024, these steps did not absolve the company of its responsibilities as a stock broker, justifying the penalty. 

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