Investors' holdings in major US companies, including Apple, Tesla, Amazon, Alphabet, Nvidia and AMD, were reportedly sold without their consent. The money was then channelled into purchases of relatively obscure stocks, exposing investors to steep losses when their prices fell.Shares sold without consent on Oct 15, proceeds bought risky Chinese stock Zhibao.
You buy shares in the stock market, add them to your portfolio and expect them to stay there until you decide to sell. But what if those shares are sold without your knowledge or permission?
This is what nearly 30 Indian retail investors have alleged happened to their US stock holdings through fintech platform Stockal Securities, with the reported losses exceeding Rs 100 crore, reported Moneycontrol.The alleged transactions took place on October 15, 2026, when investors' holdings in major US companies, including Apple, Tesla, Amazon, Alphabet, Nvidia and AMD, were reportedly sold without their consent. The money was then channelled into purchases of relatively obscure stocks, exposing investors to steep losses when their prices fell.The incident has also triggered a dispute between Stockal and its US-based clearing broker, DriveWealth, over where the security failure occurred and who should be responsible for addressing the problem.As per the report, the losses of more than Rs 100 crore are a preliminary estimate based on the accounts of two investors who spoke to the publication.
The actual losses could be significantly higher. HOW INVESTORS' US STOCK HOLDINGS WERE SOLDOne of the affected investors, a senior official at a leading beverage company in India, told Moneycontrol that 10 of his major US stock holdings were liquidated without his authorisation.The holdings included shares of Apple, Tesla, Amazon, Alphabet, Nvidia and AMD.
These were sold for a total of $335,768. However, instead of the proceeds remaining in his account or being used for transactions he had approved, the entire amount was allegedly redirected into a single order to purchase 300,000 shares of Chinese company Zhibao Technology Inc., which trades under the ticker ZBAO.The shares were bought at an average price of $1.05 apiece.
Over the following days, ZBAO's stock price fell nearly 60%, closing at $0.42 on October 23.The investor told Moneycontrol that he suffered losses of around $450,000, or Rs 4.26 crore, from the transactions.He also raised questions about the absence of routine trade notifications. According to his account, he received normal executed-trade emails for earlier transactions that he had authorised, but did not receive corresponding individual confirmations or warnings for the mass sale of his portfolio and the subsequent ZBAO purchase on October 15.He said Stockal's parent entity, Borderless, contacted him on October 18, acknowledging suspicious account activity on October 15 and informing him that DriveWealth had restricted activity.The investor has filed a complaint with Sebi seeking its intervention and has also approached the US Securities and Exchange Commission (SEC).ANOTHER INVESTOR SAYS $3.1 MILLION PORTFOLIO WAS LIQUIDATEDThe report also details the experience of another investor, who spoke to Moneycontrol on condition of anonymity.The investor alleged that securities worth $3.1 million, or around Rs 29 crore, in their Stockal account were sold without authorisation on October 15.According to the investor, the entire portfolio was liquidated in just two minutes and replaced with 30.5 lakh shares of a thinly traded stock.
The purchases were completed within 15 minutes, without any holding period, alert or verification, the investor alleged.The investor said the account had not been restored and the losses had not been reimbursed at the time of the report.An FIR has been registered in Bengaluru, naming DriveWealth LLC, Stockal Securities, Borderless Softech Private Limited, Borderless Investing Inc. and HDFC Securities.However, Moneycontrol clarified that HDFC Securities has not been named as an accused in the FIR.The report puts the preliminary losses across the two investors at more than Rs 100 crore. It cautions that the final amount could be substantially higher as more affected investors come forward.STOCKAL SAYS PHISHING OR SOCIAL ENGINEERING MAY BE INVOLVEDThe question of how the accounts were accessed remains unresolved.Stockal told Moneycontrol that the circumstances and mechanism of the activity were under investigation.
In its response, the company said its initial assessment suggested that a customer's email account and, consequently, their credentials may have been compromised through social engineering or phishing.Stockal also said that, based on its review at the time, it had not identified evidence of a breach of the Borderless/Stockal platform.This is an important distinction. While investors have reported unauthorised transactions through their Stockal accounts, the company has not confirmed that its own platform was breached.
The exact method through which the accounts were accessed and the trades were executed has not yet been established.DRIVEWEALTH AND STOCKAL DIFFER OVER RESPONSIBILITYThe incident has also exposed a dispute between Stockal and DriveWealth, the US-based clearing broker that works with the Indian fintech platform to execute trades and hold assets in custody.In a letter sent to an affected investor on October 30, DriveWealth said the unauthorised third-party access had occurred through the investor's interface with Stockal. It maintained that any security lapses relating to that platform were Stockal's responsibility and that the unauthorised activity had not originated at DriveWealth.The letter also described what DriveWealth said happened after it was informed about the incident.According to the company, Stockal instructed it to freeze the affected account while the investigation was under way.
DriveWealth said it followed those instructions but repeatedly raised concerns that freezing the account might not be enough to limit the investor's exposure to the illicitly held positions.DriveWealth further alleged that some initial attempts at corrective action were paused on Stockal's explicit instructions.It also said it had repeatedly contacted Stockal to ask whether meaningful efforts had been made to reach the affected investor, but had not received confirmation of such efforts.DriveWealth criticised Stockal's handling of the matter and said it did not derive any benefit from the positions imposed on it following what it described as Stockal's security failures and conflicting instructions.These are DriveWealth's claims in its communication to the investor. The report does not establish an independent finding on which company was responsible for the unauthorised activity.WHAT IS HDFC SECURITIES' CONNECTION?The affected investors were introduced to Stockal through HDFC Securities, which partnered with the platform in 2019 to launch globalinvesting.in.The operational global investing partnership between the two companies, however, ended in July 2024.HDFC Securities has been named in the FIR filed by one of the affected investors in Bengaluru, but it has not been named as an accused, according to Moneycontrol.The report said emails sent to Sebi, DriveWealth and HDFC Securities did not receive responses by the time of publication.Stockal's response was that the circumstances were under investigation, while one of the affected investors has approached both Sebi and the US SEC.The incident raises questions about the security of customer accounts, the safeguards around high-value trades and the responsibilities of the different entities involved in facilitating overseas stock investments.
For the affected investors, the immediate concern remains the recovery of their holdings and clarity on how transactions they say they never authorised could have been carried out.- Ends