"All my life savings have been trashed completely."
That is how an investor, whose US stock holdings were allegedly sold without her authorisation on Stockal, described her loss to NDTV Profit. Nearly three weeks on, she said, nothing has been returned and the firms involved are blaming each other.
She said both her husband and her held accounts with the platform on which the alleged fraudulent activity took place.
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The trades on her long-term stocks occurred late at night India time on October 15. She said her holdings in large US stocks were sold and then “immediately, under 12 minutes, they did thousands of transactions to buy these thinly traded stocks on my account.”
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Nearly 30 investors have lost more than Rs 100 crore in the Stockal fraud, as per a Moneycontrol report. All their holdings in large US stocks like Apple, Nvidia, Amazon, Tesla, Alphabet and AMD were allegedly sold and the funds used to buy thinly traded stocks of Zhibao Technology Inc. (Nasdaq: ZBAO) which fell more than 60% to $0.42 on October 23.
The email address on the affected accounts was changed prior to the trades and no notification of email address change was sent to the original email address, she alleged. She said both Stockal and DriveWealth (the US brokerage and custody partner of Stockal) detected the fraud on October 15 itself.
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The only email that Stockal had sent to the investor on the email address change was on the night of October 17 asking her to call up on the number provided. It was only on the morning of October 18 that the investor came to know of the specifics of the incident. Stockal in its statement said that DriveWealth had alerted Stockal of the incident on October 15 US time (October 16 in India). The access to the accounts of the 26 customers was restricted soon after the incident and the teams of Stockal are in touch with the affected customers since then.
The incident was caused by an unauthorised third party, Stockal said in a statement. They said that 26 accounts of customers had been accessed using valid login details of customers. Out of these, holdings of 13 customers had been sold but no funds had been withdrawn by the third party. Stockal said that they had found no evidence of a breach of the Borderless platform or of the internal systems of the company.
Independent cybersecurity experts had been engaged to investigate the incident. Stockal said that it believed that the customers had been victims of social engineering using information that had been exposed in a previous data breach of another company some weeks ago. Stockal said that the link to the previous breach was unconfirmed and that Stockal's assistance to customers was not an admission of any liability on the part of the company.
The investor in question totally denies Stockal's version of events and insists the company's platform security controls and data security have failed her. She says even if her credentials had been exposed in the previous breach of another company, Stockal and DriveWealth would have had to inform her of this.
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On October 18, Stockal assured her that her account would be brought back to the October 15 status. However, till now no such action has been taken by the company. DriveWealth has, on the other hand, disputed its liability in the matter. “They are busy pointing fingers at each other and not helping their investors who trusted them,” said the woman.
The woman said she and her husband have filed complaints with SEBI's SCORES portal and that the police are also acting on the matter. She further said she has asked Stockal to connect her with other investors affected by the alleged fraud so that they can take up the issue collectively.
She said HDFC Securities also has a big fiduciary responsibility as she had opened an account with them. HDFC Securities, in an exchange filing, said it is not named in the First Information Report (FIR) registered in the case and that its operational partnership with Stockal had ended in 2024.
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