Nearly 30 retail investors have alleged losses exceeding ₹100 crore in a suspected trading fraud linked to Bengaluru-based fintech platform Stockal Securities, after their US stock holdings were allegedly liquidated without authorisation and the proceeds used to purchase shares of thinly traded companies, according to a report by Moneycontrol.
The affected investors told Moneycontrol that their Stockal accounts were accessed without their permission on October 15, resulting in the sale of their US stock portfolios and purchases of relatively illiquid securities. The investors have alleged significant financial losses and sought intervention from regulatory authorities.
Stockal Securities is an Indian fintech platform registered with the Securities and Exchange Board of India (Sebi). It enables Indian retail investors to trade in US stocks, exchange-traded funds (ETFs) and other overseas securities. The platform offers account funding, trading and portfolio tracking services in India and partners with US-based clearing brokers, including DriveWealth LLC, for trade execution and asset custody.
Several affected investors were introduced to Stockal through HDFC Securities, which partnered with the platform in 2019 to launch globalinvesting.in. However, the operational partnership between the two entities ended in July 2024, Moneycontrol reported.
Investors allege unauthorised liquidation of US stock portfolios
One of the affected investors, a senior official at a leading Indian beverage company, told Moneycontrol that 10 of his major US stock holdings, including Apple, Tesla, Amazon, Alphabet, Nvidia and AMD, were sold without his authorisation.
The holdings, valued at $335,768, were liquidated and the proceeds were allegedly used to purchase 300,000 shares of Chinese company Zhibao Technology Inc. (ZBAO) at an average price of $1.05 per share.
The stock subsequently declined nearly 60%, closing at $0.42 on October 23. The investor estimated his losses from the unauthorised transactions at around $450,000, or approximately ₹4.26 crore.
He alleged that he did not receive individual trade confirmations or alerts for the transactions, despite receiving routine email notifications for earlier authorised trades.
According to Moneycontrol, the investor said Borderless, the parent entity of Stockal, contacted him on October 18 and acknowledged suspicious account activity on October 15. The communication also stated that DriveWealth had restricted activity on the account.
The investor has filed a complaint with Sebi and approached the US Securities and Exchange Commission (SEC), seeking regulatory intervention and compensation for the losses.
Another investor alleges securities worth $3.1 million sold
Another affected investor, who spoke to Moneycontrol on condition of anonymity, alleged that securities worth $3.1 million, or approximately ₹29 crore, were sold from their Stockal account without authorisation on October 15.
The investor claimed that the entire portfolio was liquidated within two minutes, following which 30.5 lakh shares of a thinly traded stock were purchased within 15 minutes. The investor alleged that the transactions took place without any verification, notification or opportunity to intervene.
The investor also told Moneycontrol that the account had not been restored and the losses had not been reimbursed.
An FIR has been registered in Bengaluru, naming DriveWealth LLC, Stockal Securities, Borderless Softech Private Limited, Borderless Investing Inc. and HDFC Securities.
Stockal says account activity under investigation
Stockal told Moneycontrol that the circumstances and mechanism behind the unauthorised transactions were under investigation.
The company indicated that the affected customer’s email account and login credentials may have been compromised through social engineering or phishing. It added that its review had not identified evidence of a breach of the Borderless or Stockal platform.
Emails sent to Sebi, DriveWealth and HDFC Securities seeking their responses did not receive replies at the time of publication, according to Moneycontrol.
DriveWealth denies responsibility
In a communication dated October 30 to one of the affected investors, DriveWealth reportedly denied responsibility for the unauthorised account access, stating that the activity originated through the investor’s interface with Stockal.
The US-based brokerage said that Stockal was responsible for security lapses on its platform and that the unauthorised activity had not originated at DriveWealth.
DriveWealth also said it had frozen the affected account following instructions from Stockal after being informed about the incident. The restriction was intended to prevent further unauthorised activity while Stockal investigated the matter.
However, DriveWealth alleged that Stockal had instructed it not to take further corrective action despite concerns about the investor’s exposure to the unauthorised positions. It also claimed that certain initial attempts to limit the investor’s market exposure were paused following explicit instructions from Stockal.
In its letter, DriveWealth criticised Stockal’s handling of the incident, alleging that the company had not acted with the urgency required or confirmed whether it had made meaningful efforts to contact affected investors.
Total investor losses could be higher
The estimated losses of more than ₹100 crore are based on preliminary figures reported by the two investors who spoke to Moneycontrol. The actual financial impact could be significantly higher as more affected investors come forward.
The circumstances surrounding the alleged account access and unauthorised transactions on October 15 remain under investigation. The responsibility of the entities involved and the extent of the losses are yet to be established.
Stockal investors allege ₹100 crore trading fraud after US stocks sold without consent