Stockbrokers in the market are only for providing your trading platform. If your broker is a full-service then they are eligible to provide you research tips & advisory services through their registered SEBI analyst.
But in any case, they are not allowed to handle account of their client. Even your stockbroker cannot ask for your login credentials. In case you face any such issues, then this is the biggest red-flag and time for you to be cautious & alert.
Recently, one of the victims Kailash (name changed) who opened an account with one of the full-service brokers and lost 50k in account handling.
Prakash: Hello ADB team.
ADB: Yes Mr. Prakash, please tell how I can help you?
Prakash: Recently, I received a call from one of the full-service stockbrokers who asked me to open a demat account with them.
ADB: Okay, what happened next?
Prakash: After account opening they told me that they would handle my account and take trade positions on my behalf.
ADB: Account handling? But stockbrokers are not allowed to handle their client accounts even if they are registered.
Prakash: Yes, but I was not aware of this that time. So I agreed and added a fund of ₹5000 in my trading account. First day, I made a profit of ₹1500. Then they ask me add more fund to make bigger profits.
ADB: How much amount did you add later?
Prakash: Around 50k.
ADB: Did you earn profit on that?
Prakash: No, infact they wiped off my profit and the entire capital in 2 days.
ADB: They did so to make brokerage. They had completely violated SEBI guidelines. You can file a complaint in NSE and further report this with all the valid proofs to SEBI.
Prakash: Thank You Sir!
ADB: You are welcome and in the future stay alert and do not share your login id and password with anyone.
Stay Alert & Safe and in case you need further help to report case, feel free to reach out.
So, here is the complete case of Prakash that leaves many learnings for you behind. Here at first instance it is difficult to find anything wrong as most of you might think that broker is SEBI registered body.
But even SEBI registered stockbrokers and other entitites have to follow rules & guidelines to follow.
Violation of any regulation makes them liable to pay penalty and all the losses that the traders have made. However, this is a length process and sometimes take months to resolve.
It is your primary duty to stay informed and alert before sharing any information with your stockbrokers. Furhter, in case of any red-flag immediately takes an action and file a complaint against stock broker to increase the chances of recovery of your losses.
Hope this helps!
