There was no fee, and that was supposed to be the good news.
The broker told him plainly: we will not charge you anything, we make our money from your brokerage.
To Sonu (name changed), a simple man, in Gorakhpur putting in around ₹5 lakh, that sounded like a firm whose interests were lined up with his.
A month later, the brokerage alone on that account had come to about ₹3,25,000. The “no fee” was never generosity.
It was the entire scheme, said out loud at the start.
Roughly two out of every three rupees he put in went to commission.
That is not trading that went wrong. That is trading built to generate brokerage.
How the “No-Fee” Brokerage Trap Secretly Emptied His Account?
This was a registered broker, and that is what makes the case clean. But it did not behave like one.
A broker’s job is to execute the orders you decide on. This one did the opposite: it gave him the calls.
Take this lot, take this quantity, this premium is at ₹3 and it will go higher. He followed the instructions, trade after trade, and each one spun the meter.
The brokerage stacked up until ₹3.25 lakh of his ₹5 lakh had quietly drained away into commission.
When Sonu took it to SEBI, he was told at first that it could not simply proceed, that the firm would have to be represented and the matter taken through the proper steps.
He read that as a door closing. It is not.
That is about how the case is presented and pushed through the right channels, not about whether he has a case. He plainly does.
Warning Signs Your Broker Is Overcharging You in Brokerage Alone
You can see the whole thing in two simple observations, and both map onto rules the broker broke.
1. A broker is meant to execute, not to give you the calls
The instant your broker starts telling you exactly what to buy, how much to trade, and which premium to pick, they cross a dangerous line. This leaves many misled traders wondering: Can brokers give personalized trading calls? The clear regulatory answer is no.
A broker’s licensed role is strictly to execute the trades you decide on. When they step over that boundary to push specific, high-volume recommendations directly to you, they stop acting as a platform and start acting as an unauthorized account handler.
He was not placing his own decisions; he was blindly following theirs, and that is a severe regulatory violation.
2. “We earn from your brokerage” is the churning motive admitted in advance
This is the heart of it. When a broker’s income depends on how much you trade rather than how well you do, every “take more quantity, take this premium” call is working for the broker, not for you.
The rules forbid a broker from running up trades to generate commission precisely because of this conflict, and here the conflict was not hidden, it was the sales pitch.
A ₹3 premium and a large quantity were not chosen because they were good for him. They were chosen because they manufactured brokerage.
3. Brokerage at roughly 65% of capital is the proof, not the suspicion
When commission eats two-thirds of what you put in, the trading was never about your gains. As a rough guide, when brokerage runs to a large share of your capital, it points to churning.
Here it was the overwhelming majority of the account.
The market did not take his money. The commission did.
And the best part for him is that none of this rests on his word. The contract notes and the ledger, produced by the broker itself, list every trade and every rupee of brokerage.
Set the total brokerage against the ₹5 lakh he put in, and the pattern is not an argument, it is arithmetic in the broker’s own records.
The screenshot of his demat and those contract notes are very nearly the whole case.
What Retail Investors Can Learn From This Case?
When a broker tells you “no fee, we make our money from your brokerage,” listen carefully. Because it has just told you exactly how it plans to profit, and it is not from your success.
It is from your volume. A genuine broker executes what you decide and earns a transparent, modest commission on it.
One that hands you the calls and grows richer the more you trade has every reason to keep you trading, no matter what it costs you.
If you find yourself trapped in a similar loop where forced trades are draining your demat account, knowing how to file a complaint against excessive brokerage charges is your first step toward recovery.
₹3.25 lakh of brokerage on ₹5 lakh is not a fee he cleverly avoided.
It is the fee, collected a different way, and it sits in black and white in the broker’s own ledger, which is exactly why this is a case and not just a bad month.
How to File a Complaint Against a Broker for Excessive Brokerage?
Step 1: Secure Your Evidence Trail
Do not delete anything. Download your official account ledgers and contract notes directly from your broker’s portal.
These documents contain the mathematical proof of the excessive brokerage charges. If they gave you tips over WhatsApp or calls, save those chat logs and screenshots immediately.
Step 2: File a Formal Complaint Directly with the Broker
Your first legal step must always be raising the issue with the broker’s internal compliance officer. Send a formal email detailing the unauthorized trades.
Clearly state that they violated regulations by engineering excessive trades (“churning”) to pocket your capital as commission. Attach your ledger showing the ₹3.25 Lakh drain and demand a refund.
Step 3: File a complaint in SCORES
Log in to the SEBI SCORES portal and file a formal complaint against the registered broker.
Clearly state that the broker acted as an unauthorized adviser by giving specific trade calls and engineered excessive trades (“churning”) solely to pocket your capital as commission. Upload your ledger as proof.
Step 4: Raise a Complaint in SMART ODR
If the broker rejects your claim or gives an unsatisfactory response on SCORES, escalate the dispute to the SMART ODR platform.
This initiates an online dispute resolution process where an independent arbitrator will review the arithmetic of your heavily drained capital.
Step 5: Go for Stock Market Arbitration
If the dispute remains unresolved, opt for stock market arbitration.
During the virtual hearings, present your case calmly: highlight that the broker admitted they “earn from your brokerage” and look at the final numbers—₹3.25 Lakh taken out of a ₹5 Lakh capital is a blatant violation of a broker’s code of conduct.
Lost Your Savings to Excessive Brokerage? Let Us Help You Fight Back
Many traders give up because they feel they technically “allowed” the trades to happen. You might think following their calls means you have no legal leg to stand on, but that is completely wrong.
No registered broker has the right to manipulate your trading volume just to fill their own pockets.
Our team helps victims of broker churning decode the mess. We will analyze your contract notes, calculate the exact ratio of brokerage to your total capital, isolate the regulatory breaches, and build a airtight file for your recovery case.
If a broker drained your hard-earned money through forced trades, reach out to us today to evaluate your legal options.
Conclusion
When a broker wipes out ₹3.25 Lakh of your ₹5 Lakh capital in a single month through commissions, it isn’t a bad trading streak, it is an illegal churning scheme.
A broker’s job is strictly to execute your orders, not to feed you forced calls designed to spin their own revenue meter.
The arithmetic in your ledger is your strongest weapon. Do not let a broker’s “no-fee” excuse trick you into staying silent.
Gather your contract notes, download your statements, and file your complaint to claim what is rightfully yours.
Frequently Asked Questions
1. Can a registered broker give me buy and sell tips?
A broker’s role is to execute your orders, not to tell you what to buy and how much. When a broker starts giving you the calls, it is acting as an adviser it is not licensed to be.
2. The broker said there is no fee, it only earns from brokerage. Is that a problem?
It can be the core of the problem. When a broker’s income depends on how much you trade, it has every incentive to make you trade more, and running up trades to generate commission is exactly what the rules against churning prohibit.
3. How do I know if it was churning?
Compare the total brokerage to your capital using your contract notes and ledger. When commission makes up a large share of what disappeared, especially on trades the broker told you to make, that is the classic churning pattern.
