MUMBAI, April 10 -- The Securities and Exchange Board of India (Sebi) has been asking brokers to step up checks on authorised persons (APs) and reinforce compliance every few months, according to three people familiar with the matter. "Sebi has been informally advising brokers to carry out annual checks and surveillance on authorized persons. They call every 2-3 months to reinforce this," said one of the three people cited above. "It 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. Official data on their numbers is not publicly available. "Such scams have always been around but have become more easily identifiable for Sebi. Victims have also started complaining more since the markets have been down in the past two years and they have been forced to bear immense losses," said Tomu Francis, partner at Khaitan and Co. 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. An AP can be associated with only one trading member for a given segment and cannot be appointed by multiple brokers on the same exchange. They can affiliate with another trading member only for segments where their existing trading member is not registered. Stock exchanges have also stepped up engagement with brokers alongside Sebi. "NSE (National Stock Exchange) met all brokers a couple of weeks ago and told them again to ensure their APs do not engage in fraud," the second person mentioned above said. NSE and Sebi did not respond to Mint's queries sent on Wednesday. Sebi's regulatory push comes amid formal investigations against brokers who failed to control their APs. In November 2025, the regulator fined Angel One Rs.300,000, citing 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 Rs.300,000 penalty in June 2025 for oversight lapses, including use of unqualified personnel and misuse of client credentials. "APs sometimes go beyond their role as they want to earn more money. They start promising assured returns to clients they have a long standing relationship with," said Abhiraj Arora, partner at Saraf and Partners. Francis of Khaitan and Co. said that APs exploiting their relationship with clients often target people who are less financially literate. Such arrangements are not documented, and the investor continues to believe they are trading with the broker. Brokers conduct surprise inspections and maintain checklists for compliance, but "surveillance is difficult as AP can still engage in misconduct without the broker knowing," Arora said....