Stockal Investors Report Unauthorized Trades Amid Shift from US to Chinese Stocks

Over 30 Indian investors report unauthorized trades involving U.S. stock holdings, with losses exceeding ₹100 crore as shares are redirected to Chinese firms.

Unauthorized Transactions and Financial Impact

Nearly 30 Indian investors have raised concerns over unauthorized transactions involving U.S. stock holdings, with reported losses surpassing ₹100 crore. The incidents involve the liquidation of shares in major American technology firms, including Apple, Nvidia, Amazon, Tesla, Alphabet, and AMD, on October 15, 2026. Affected account holders allege that their portfolios were altered without consent, with proceeds redirected into shares of Zhibao Technology Inc., a Chinese company listed on Nasdaq under the ticker ZBAO.

Details of the Alleged Transactions

Complaints have been submitted to regulatory bodies in both India and the United States, while the platform and its brokerage partner have contested liability for the events. The alleged transactions occurred through Stockal Securities, a Bengaluru-based fintech firm that provides Indian investors access to overseas equities. According to affected users, their holdings were liquidated without prior knowledge or authorization, with the funds used to purchase millions of Zhibao shares. The Chinese stock, which is considered illiquid, experienced a sharp decline in value, reducing its average purchase price from $1.05 to $0.42 within eight days.

One investor, a senior executive at a major beverage company, reported that 10 U.S. stock positions were sold for approximately $335,768, with the proceeds allocated to 300,000 Zhibao shares. The individual estimated losses of $450,000, equivalent to ₹4.26 crore, and stated that no trade confirmations or alerts were received.

Platform and Brokerage Responses

Stockal’s parent company, Borderless, acknowledged suspicious trading activity but stated that its internal investigation found no evidence of a system breach. The firm reported that its U.S. brokerage partner, DriveWealth, notified it on October 16 about unauthorized activity affecting 13 customer accounts during U.S. trading hours on October 15. Borderless indicated that an external party accessed 26 accounts using valid login credentials, leading to the sale of large-cap U.S. equity holdings and the purchase of microcap securities. The company restricted access to affected accounts and asserted that no funds were withdrawn.

Regulatory and Legal Implications

The dispute between Stockal and DriveWealth centers on responsibility for the incident. Stockal collaborates with U.S.-based brokers like DriveWealth to enable international investments, creating a separation between the platform used by customers and the entity executing trades. DriveWealth reportedly informed an affected investor that the unauthorized access occurred through Stockal’s interface rather than its own systems, attributing the lapse to the platform’s security measures. The brokerage criticized Stockal’s response and questioned whether adequate urgency was applied.

Investigations and Regulatory Actions

Investigations are ongoing to determine how accounts were compromised and how transactions were processed. HDFC Securities, which previously partnered with Stockal in 2019 to offer a global investing service, has been mentioned in the context of the incident. However, the operational collaboration ended in July 2024, more than two years prior to the alleged breach. HDFC Securities clarified that it was not named in the First Information Report (FIR) related to the case and emphasized its commitment to regulatory compliance.

Affected investors have escalated the matter to the Securities and Exchange Board of India (SEBI) and the U.S. Securities and Exchange Commission (SEC), seeking regulatory intervention and compensation. An FIR has been filed against entities including DriveWealth LLC, Stockal Securities, Borderless Softech Private Limited, Borderless Investing Inc., and HDFC Securities. The investigation will focus on whether account credentials were compromised, whether authentication protocols were bypassed, and how the disputed transactions were authorized.

Broader Industry Concerns

The financial impact of the incident remains under assessment, with factors such as the number of affected accounts, transaction prices, remaining holdings, and potential recoveries influencing the final outcome. The case has sparked broader concerns about account security, transaction verification processes, and liability frameworks for platforms facilitating cross-border investments.