Wing Commander V Rajagopalan was in for a shock when he opened the mails
from K Ltd his depository participant-cum-stock broking company in early December
they were contract notes for futures trades of 400 Hero Honda shares worth
a couple of lakh. Interestingly, the trades were never transacted by him either
online or offline, that is, through telephonic orders to his broking company.
immediately complained to the company and asked them to stop the trades and
block the trading account till the correct entries had been made. Instead,
the contracts continued to bombard him.
repeated complaints, another executive of the broking company agreed to investigate
how transactions were taking place in his account if the trades had not been
agreed to by Rajagopalan. Fortunately for Rajagopalan, the broking company
had installed telephone recording facilities to record all conversations between
employees and the clients. The executive was able to trace the trades having
been executed by his one of colleagues in the office.
was immediately informed about what had happened. "I was told that this
person had misheard the caller's identity number and keyed in my number,"
he says. Nevertheless, trades continued to happen in his account till 30th
when the transactions stopped, Rajagopalan found he was down by Rs23,000,
and was asked by the broking company to pay up this amount. The baffled air
force officer refused. Now another shock awaited him the broking company
appropriated his security deposit of Rs20,000 and sent him a notice to pay
the remaining Rs3,000.
Rajagopalan's refusal to pay, the broking company sold some of his Petronet
LNG shares from his demat account and appropriated the proceeds.
the broking company's executive whose error had led to the all round confusion,
agreed to make good the loss through day-trading in shares on Rajagopalan's
behalf and asked him for some margin money. When Rajagopalan refused to give
the money, the executive agreed to participate in day trading in order to
compensate the losses to the air force officer.
day trading began taking place in Rajagopalan's account. Like any other investor,
Rajagopalan didn't want to rock the boat and kept quiet when contract notes
of the daily trades began to arrive in his mailbox.
the market was booming this executive got me some shares of Indraprastha Gas
valued around Rs10,000. With Rs13,000 still to be made good, this executive
asked for some cash so that he could improve the rate of his trading. Since
I wanted to end this business as soon as possible, I transferred Rs30,000
to the broking company," says Rajagopalan
there the matter rests except that the Indian Air Force officer is still awaiting
the remaining Rs13,000 to be made good to him.
episode raises some unanswered questions:
what safety do clients of broking companies enjoy?
to the broking company's website the person who attends the call / trade dealer
have to identity of the customer by asking a set of questions, which are filled
at the time of registration. Only after the identity is verified, would a
customer be able to place / modify / cancel the orders. How the trade dealer
did the verification in Rajagopalan's case still remains a mystery.
didn't the broking company take any action on the Rajagopalan's complaints
to the customercare section?
how did the broking company appropriate Rajagopalan's security deposit and
liquidate his shares after he complained of the unauthorised trades
in his account?
- Who is
to blame for the entire mess? If the company is blameless then who is responsible
for the deliberate wrong trades
that were executed in Rajagopalan's account.
were unauthorised day trades taking place in his account to make good the
security deposit misappropriated from his account?
identity of the broking company and its employees has been witheld at the
express request of Wing Commander Rajagopalan so as not to jeopardise the
prospects of recovering the remaining portion of his security deposit appropriated
by the company.)