Praveen (name changed) is a family man from a district in Maharashtra. The kind of household where a trading account is a serious decision, talked over with the people at home.
A group reached out on WhatsApp and email with a reassuring introduction: “hum research team hain”, we are a research team, we do this, we handle that.
Praveen believed it, logged into his trading application as they asked, and let them get to work.
By the end, in his own words, “ab kuch nahi bacha”, there was nothing left.
The fact that decides this entire case is simple, and Praveen already knows the answer: he never told them to place a single one of those trades.
How Broker Used Options Churning to Drain His Demat Account?
The trades were not his. They were theirs. “Ye le lo, wo le lo”, take this, take that, was the whole of it.
Praveen was never asked which trade to place or which to skip; he was not pre-consulted, and there was no confirmation taken from him before or after.
The account simply moved, on instructions he never gave.
And the trades had a pattern that gives away the purpose. They kept loading at-the-money options in heavy quantity, a hundred, two hundred lots at a stretch, pushing the lot turnover into the range of tens of lakhs.
At-the-money was not chosen because it suited his goals. It was chosen because it let them take more lots, and more lots means more brokerage.
The instrument was selected for the commission it generated, not for the person whose account it drained.
One option after another, the brokerage and the losses hollowed out the demat until it was empty.
There is a letter sitting in the account now, and positions that may still be running.
What Went Wrong in His Account?
Behind the sudden collapse of his lifetime savings lies a deliberate pattern of unauthorized trades and hidden commissions.
1. Unauthorized trading is the heart of it
A broker may act only on the client’s instructions, with proper pre-trade and post-trade confirmation. The Code of Conduct in the SEBI (Stock Brokers) Regulations, 1992 requires faithful execution of the client’s orders, high standards of integrity, and due skill, care and diligence.
Trades placed without the client telling them to place each one is called unauthorized trading, full stop. “Ye le lo, wo le lo” coming from their side is not an order coming from yours.
Unauthorized trading remains unauthorized, regardless of the outcome. A profitable result does not make it acceptable. Likewise, losses arising from such trades fall on the broker, not the client.
2. The options were chosen to milk brokerage, that is churning
Churning occurs when trade volume serves the broker’s interests rather than the client’s objectives. In this case, large quantities of at-the-money options were traded repeatedly.
Such activity increased brokerage costs significantly.
The focus appeared to be commission generation, not investor benefit. As a result, brokerage charges accumulated while the client bore the risk.
3. A “research team” has no business operating your account
Research and trade execution are entirely different functions. A research team may provide recommendations. However, it cannot take control of a client’s account and execute trades.
Telling a client to “leave everything to us” crosses an important boundary. The evidence did not rely solely on verbal claims.
Contract notes, ledger entries, and trade records documented every transaction, lot size, and brokerage charge.
These records help determine whether proper instructions existed before execution. When an account reflects repeated transactions without clear client approval, the pattern becomes difficult to ignore.
Combined with unusually high brokerage generation, the records raise serious concerns about how the account was handled.
What Investors Can Learn From This Case?
There is one question that settles cases like this, and it needs no market knowledge to ask: did you tell them to place each trade?
If the answer is no, then everything that followed was theirs, not yours, and a loss built on trades you never authorized belongs to the broker who placed them.
Look closely at the choice of trades, too. When the instrument is picked for the lot count and the brokerage rather than for your goal, the account was never being traded on your behalf.
It was being harvested.
A “research team” that asks you to log in and then trades your money without asking you anything has stopped advising and started using you, and the records they generated are what prove it.
How to File a Complaint Against the Broker?
If you are reading this and realizing your broker emptied your demat account without your permission, you must act immediately. Do not let them convince you it was “market loss.” It was unauthorized trading, and the law is on your side.
Here is a step-by-step method on How to File a Complaint Against Unauthorised Trading and against your broker:
- Step 1: Gather Your Proof: Download your contract notes and account ledgers. These documents record every single unauthorized option lot and the exact brokerage they milked from your account. This is your primary evidence.
- Step 2: Submit a Formal Complaint with the Broker: Write a clear, written complaint to the broker’s compliance officer stating that specific trades were executed without your pre-trade or post-trade confirmation.
- Step 3: Lodge a Complaint in SCORES: If the broker ignores you or denies liability, immediately file a complaint on the SEBI SCORES portal. Clearly state that the broker practiced “churning” and executed unauthorized trades in violation of the SEBI (Stock Brokers) Regulations, 1992.
- Step 4: File a Complaint in SMART ODR: If your complaint on SEBI SCORES does not yield a fair result, or if you want an independent, digitized review before moving to full arbitration, file a case on the SMART ODR portal.
- Step 5: Go for Stock Market Arbitration:If the SCORES resolution is unsatisfactory, you have the right to take the matter to exchange arbitration to recover your hollowed-out funds.
Need Help Fighting Back?
Wiping out a family’s life savings through heavy options churning is a serious offense, but fighting large brokers alone can feel overwhelming.
You do not have to navigate the SEBI complaint or arbitration process by yourself.
If your broker emptied your demat account and you need help analyzing your contract notes, proving unauthorized trades, or drafting your legal complaint, reach out to us today.
We will help you stand up to the broker and fight to get your hard-earned money back.
Conclusion
At the end of the day, a single question settles cases of unauthorized trading: Did you tell them to place each trade?
If the answer is no, then those trades, those massive option lots, and the resulting losses belong entirely to the broker, not to you.
A rogue “research team” that tricks you into logging in just to harvest your account for commissions has violated SEBI’s strict Code of Conduct.
Your demat account was built on your hard work, and no broker has the right to empty it.
Trust the records, hold them accountable, and take the legal steps to reclaim what is rightfully yours.
Frequently Asked Questions
1. Can a broker place trades in my account without my confirmation?
No. A broker must follow your instructions and obtain proper confirmation. Trades executed without approval are unauthorized. In such cases, the broker bears responsibility for the resulting losses.
2. They kept buying options in large lots. Is that churning?
It may. Churning occurs when excessive trading primarily generates brokerage income. If trade size and frequency do not serve your interests, the broker may have breached its duty of care.
3. Who is liable for unauthorized trades?
The broker bears responsibility when trades occur without your instructions or consent. The outcome of the trade does not matter. Authorization determines liability, not profit or loss.
