Stockal Faces Allegations of Unauthorised Trades

Bengaluru-based fintech platform Stockal is facing allegations of unauthorised trading after nearly 30 Indian investors claimed that their investment portfolios were sold without their consent and the proceeds were used to purchase low-priced stocks. The investors have alleged that transactions carried out on October 15 involved the unauthorised sale of shares in major US companies, including Tesla, Apple, Amazon, Alphabet and Nvidia. The funds were allegedly redirected to shares of Chinese company Zibao Technology, listed on the Nasdaq. One investor claimed that shares worth over $300,000 were liquidated, resulting in losses of more than ₹4 crore as Zibao Technology's stock subsequently plunged. Another investor alleged that shares worth ₹29 crore in his account were sold within just two minutes. Around 30 investors have reportedly flagged similar suspicious transactions, with the collective losses estimated to exceed ₹100 crore.

Following the complaints, investors approached the Securities and Exchange Board of India (SEBI). Stockal said it was investigating the suspicious transactions and suggested that phishing attacks on investor accounts could have been involved. However, the company stated that it had found no evidence of a cyber intrusion into either its platform or that of its parent company, Borderless. The incident has also brought differences between Stockal and its US brokerage partner, DriveWealth, into focus. In a communication to investors, DriveWealth reportedly said that the security lapse was Stockal's responsibility and alleged that an unauthorised third party had accessed investors' portfolio information. It also claimed that Stockal had not taken appropriate action. The allegations and competing explanations have raised concerns among investors about the security of digital trading platforms.