Sunita (name changed), who runs a small business in Kolkata, had been in the market only a few months. She had a demat account with a well-known SEBI-registered broker and not much confidence in her own trading. So when a voice on the phone offered to do the hard part for her, it landed exactly where it was meant to.
He called himself an advisor. He would handle the trades. And his terms sounded almost generous: he would only take 35% of the profits. No profit, no fee. He only wins if you win.
It felt fair. It was already a violation before a single trade was placed.
He began running her account. The calls came on WhatsApp – this strike, this many lots, now always spoken on a call, never written down. He sent her screenshots of other clients’ profits to keep her confident. He nudged her toward “packages.” He took ₹5,000 in cash, and more after that. And the trades kept coming, fast, one after another.
Soon, the market turned. The account suffered losses between ₹1.2 lakh and ₹1.5 lakh, while heavy brokerage fees accumulated on every transaction. When she said she wanted to stop, the tone changed. When she asked for her money, the conversation turned into deposit more, take a package, we’ll recover it.
When she came to us, she blamed herself – she had, after all, let him trade. But the self-blame was misplaced. The arrangement itself broke the rules from the very first sentence. We have taken up her case, and there are three separate violations sitting inside it.
Three Lines That Were Crossed Before the Losses Even Started
1. Profit-sharing is prohibited
This is the big one, and almost nobody knows it. No SEBI-registered broker, sub-broker, research analyst, or adviser is allowed to take a share of your profits or your losses. “I’ll take 35% of the profit” is not a partnership. It is a banned arrangement. And it quietly flips the incentive: someone earning a cut of activity benefits from more trading, not better trading, which is exactly how accounts get churned.
2. Running your account is not allowed
A registered intermediary cannot operate your account for you or place trades without your specific authorisation for each one. The decisions and the trades have to be yours. The moment someone else is logging in and trading “on your behalf,” that is unauthorised account handling.
3. Personalised lot-size calls exceed the licence
An advisor or research analyst can offer general views. Dictating exact strikes and quantities for your account, live on a WhatsApp call, is individualised advice they are not licensed to give.
Any one of these stands on its own. Together, they make the “I made bad trades” story collapse – because Sunita was never the one trading.
Whose Fault Is It – the Broker’s or the Advisor’s?
Both questions have the same answer for you. If the trades show brokerage piling up on the contract notes, a broker or its sub-broker was driving the churn, and a SEBI-registered broker is accountable for the people operating under its name. If it was sold as an “advisory package,” that is a research/advisory breach. Either way, the registered entity does not get to hide behind the individual who called you.
Real Cases: Profit Sharing and Unauthorised Account Handling
Cases like Sunita’s are not isolated incidents. Across India, investors have reported instances involving unauthorized trades, profit-sharing arrangements, misleading return promises, and trading activity carried out without proper consent. Several such disputes have reached arbitration forums and regulatory authorities.
Profit-Sharing Scam Recovery: How Mr. Ansari Reclaimed ₹4.65 Lakh From NiftyPro
Mr. Muhammad Chand Ansari, a trader from Saharanpur, partnered with NiftyPro Trading Research. A representative assured him of guaranteed stock market profits. Mr. Ansari could not afford the initial advisory fee of ₹1,00,000 per month. The firm then offered an illegal 30% account handling and profit-sharing arrangement. They collected ₹55,000 upfront. Following their advice, Mr. Ansari invested ₹4,65,000 in the stock market. The firm implemented no risk management protocols, wiping out his entire capital. The firm then issued a fraudulent invoice, falsely labeling the upfront profit-sharing payment as a standard service fee. Mr. Ansari realized something was wrong when he lost his entire investment on reckless advice and the firm altered the paper trail.
Our team gathered voice recordings and regulatory precedents to represent Mr. Ansari in online arbitration, securing a sole arbitrator award that ordered a 100% refund of his lost capital and upfront fees with 15% interest.
Regulatory Violations Exposed: How an Investor Won ₹15.57 Lakh From Aurostar
An investor hired Aurostar Investment Advisory for professional stock market guidance. The firm collected the agreed annual fee of ₹1,47,500. After taking this payment, the firm completely skipped the mandatory risk profiling step. Representatives then demanded an illegal profit-sharing arrangement. They also demanded an additional ₹5 lakh in cash. They explicitly instructed the investor to transfer this money from his wife’s account to hide the transaction.
Then, the firm abandoned its official SMS-only policy. Instead, they pushed aggressive, high-risk trading recommendations through phone calls and WhatsApp. This reckless handling quickly caused massive trading losses. The investor realized something was wrong when the firm demanded off-the-books cash payments and used hidden communication channels to bypass their own contract.
The investor took the matter to formal arbitration. The arbitrator held the firm fully accountable for these clear rule violations. The final award ordered Aurostar to pay ₹14,10,000 to cover the trading losses. It also ordered a full refund of the ₹1,47,000 service fee. Both amounts carry a 15% annual interest penalty until the firm pays the investor back.
How You Get It Back
Step 1: File a written, violation-wise complaint with the firm’s compliance officer – name the profit-sharing offer, the account handling, the lot-size calls, the fees, and the brokerage.
Step 2: No real resolution in 15 working days? File on SEBI SCORES.
Step 3: Escalate to SMART ODR, then to exchange arbitration before a panel if it is not settled.
Be prepared for an initial lowball settlement offer from the firm, such as a partial refund of fees. That is the opening move, not the limit. The claim covers the fees and the losses, and the cleaner the evidence, the further it goes.
Save everything now – the WhatsApp messages with lot sizes, any text where the 35% cut was offered, the cash and online payment proofs, the contract notes showing brokerage, and those “other client profit” screenshots. The profit-sharing offer alone is one of the cleanest pieces of evidence a case like this can have.
The line Sunita wishes she had known: the day someone offers to trade your account for a share of the profit, the scam has already started, the losses are just the part you see later.
FAQ
Can a broker or advisor legally take a share of my profits?
No. Profit-sharing with a SEBI-registered broker, sub-broker, research analyst, or adviser is prohibited. The offer itself is a violation, regardless of how it is framed.
Someone else was placing trades in my account with my login. Is that allowed?
No. A registered intermediary cannot run your account or trade without your specific authorisation. That is unauthorised account handling, and it is claimable.
I lost money, but I let him trade for me. Can I still claim?
Yes. The arrangement — profit-sharing plus account handling — was prohibited from the start. That is the basis of the claim, pursued through SCORES and SMART ODR.
