Nearly 30 Indian investors allege that their US stock holdings were sold without consent after unauthorized access to their Stockal Securities accounts, according to complaints filed with Indian and US regulators.
The investors say that blue‑chip shares worth millions of dollars were liquidated and the proceeds used to buy roughly 300,000 shares of Zhibao Technology Inc. (ticker ZBAO) at $1.05 each. The stock later fell to $0.42, leaving one senior official with a loss estimated at Rs 4.26 crore on a $335,768 position.
Stockal says the breaches involved valid login credentials and attributes them to phishing attacks that compromised customers’ details. DriveWealth, the US brokerage that holds the accounts, disputes this, blaming security shortcomings at Stockal.
Regulatory complaints and dispute
The affected investors have lodged complaints with the Securities and Exchange Board of India (SEBI), the U.S. Securities and Exchange Commission (SEC) and Bengaluru police. Both Stockal and DriveWealth have offered conflicting explanations, leaving investors uncertain about liability.
Broader implications for overseas investing
Analysts note that coordinated buying across multiple accounts can inflate the price of a thinly traded stock, a pattern associated with pump‑and‑dump schemes. The case underscores the complexity of investor protection when Indian apps route trades through U.S. brokerages, raising questions about regulatory jurisdiction and the division of responsibility between intermediaries.
Neither the complaints nor the companies have identified who, if anyone, profited from the trades.
Why it matters: The incident highlights security risks for Indian investors using overseas platforms, and it raises regulatory challenges about protecting funds when trades are settled abroad, a concern for many Middle Eastern and Egyptian investors who also rely on cross‑border brokerage services.