Retail investors suffer Rs 100-crore loss in unauthorized trades

Nearly 30 Indian retail investors have reported losing over Rs 100 crore due to unapproved liquidation of their US stock portfolios on Bengaluru-based fintech platform Stockal Securities. Unauthorized orders executed on October 15 drained blue-chip holdings to fund bulk purchases of a Chinese penny stock, leading to severe financial damage. Cross-border equity investment has surged across India in recent years, making platform security critical for those trading in global markets. In this incident, shares from major technology firms such as Tesla, Apple, and Nvidia were sold off without user consent. Funds were immediately diverted to acquire large quantities of Zhibao Technology shares. That particular stock quickly plummeted by 60 percent, dropping to $0.42 by October 23 and erasing millions in retail wealth. Stockal and its US-based clearing partner DriveWealth are currently disputing accountability for the security failure. DriveWealth claims the unauthorized access originated through the Indian startup's user interface. Conversely, the Bengaluru firm states its preliminary internal review found no system compromise, suggesting users might have fallen victim to phishing or social engineering attacks instead.

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Regulatory complaints seek strict financial probes

Affected individuals are desperately seeking intervention from both the Securities and Exchange Board of India and the US Securities and Exchange Commission. One investor lost an estimated Rs 4.26 crore in just 15 minutes, noting that standard trade verification alerts were completely bypassed. Another user reported their entire $3.1 million portfolio was wiped out and replaced with thinly traded securities. Law enforcement officials in Bengaluru have registered a police complaint naming multiple corporate entities involved in facilitating the overseas trades.

Many affected clients originally joined the service through a previous partnership with HDFC Securities. Although that specific global investing collaboration ended in July 2024, the brokerage firm has been named in the recent police complaint, though not as an accused party. Regulators have yet to issue official public statements regarding the recovery of these foreign holdings.