How Indian investors allegedly lost ₹100cr in Stockal trading scam
What's the story
Nearly 30 retail investors have reported unauthorized access to their Stockal accounts and liquidation of their US stock holdings. The Bengaluru-based fintech platform allows Indian retail investors to trade in foreign securities like US stocks and exchange-traded funds (ETFs). The alleged scam has led to massive losses for the affected investors, with some claiming losses of up to $450,000 (₹4.26 crore).
Investor impact
Stocks include Apple, Tesla, Amazon, and NVIDIA
One of the affected investors, a senior official at a leading beverage company in India, said 10 of his major US stock holdings were liquidated without his consent.
The stocks included Apple, Tesla, Amazon, Alphabet, NVIDIA and AMD.
The entire sale proceeds were then used to buy shares of Chinese stock Zhibao Technology Inc. (ZBAO), which plummeted nearly 60% over the next few days.
Accusations
Investors have approached SEBI and filed an FIR
The investor has lodged a complaint with the Securities and Exchange Board of India(SEBI) seeking intervention, and also approached the US Securities and Exchange Commission (SEC).
Another affected investor said securities worth $3.1 million (about ₹29 crore) in their account were sold without authorization on October 15.
This investor has filed an FIR in Bengaluru naming DriveWealth LLC, Stockal Securities, Borderless Softech Private Limited, Borderless Investing Inc., and HDFC Securities.
Response
DriveWealth's letter to one investor
In a letter to one of the affected investors, DriveWealth said that the unauthorized access to their account happened in their interface with Stockal and any security failures related to that platform are Stockal's responsibility.
The letter added that "the unauthorized activity did not initiate at DriveWealth" and it is not responsible for any account security failures by Stockal.
Ongoing probe
Stockal's response to the issue
Stockal has confirmed that the circumstances and mechanism of the activity are "under investigation."
An official email to Moneycontrol stated, "Based on our review to date, we have not identified any evidence of a breach of the Borderless/Stockal platform."
The investigation is ongoing as the circumstances and mechanism of the activity are under investigation.