Several investors of Borderless (formerly Stockal) have approached authorities with concerns that there have been unauthorised transactions in their accounts holding overseas securities. The value of these alleged transactions is estimated to be in the range of ₹80-100 crore; these investors have urged appropriate action against the broker.
Impacted investors Business Standard spoke to said their US largecap holdings were liquidated by alleged perpetrators in the breach to buy other thinly traded stocks — a move claimed to be an act to raise the prices of the securities to facilitate a profitable exit for perpetrators.
“Our registered emails were changed by certain players after they gained access to our accounts. We got transaction alerts at midnight, and our follow-on queries to Stockal remained unanswered. We still have no clarity on our holdings and status, and at this point do not trust the communications. Our millions of funds are stuck and we highly suspect an insider’s role in it and urge for a probe in the matter,” said one of the impacted investors, seeking anonymity.
The investors have since filed first-information reports (FIRs) and lodged complaints against the platform on Sebi’s Complaints Redress System (SCORES) portal against the broker registered as Stockal. A copy of an FIR reviewed by Business Standard names Stockal Securities, Borderless and its US brokerage partner, DriveWealth, among the accused.
Investors also said they filed a complaint with the US securities markets regulator, the US Securities and Exchange Commission (SEC).
Borderless’ spokespersons said their investigations indicate that the accounts were individually targeted through phishing or social engineering, resulting in compromised customer credentials.
The platform was first notified on October 16, and began contacting affected clients the next day. “Our immediate priority was to investigate the incident, contain any ongoing risks and work with DriveWealth towards restoring account access. All affected clients had been informed by Monday, October 19,” they said.
The company’s public report stated that a third party appeared to have accessed 26 customer accounts using valid login credentials. In 13 of these accounts, existing largecap US equity holdings were sold and the proceeds were used to purchase thinly-traded microcap securities.
The Bengaluru-based firm said it found no evidence of a breach, and introduced additional safeguards and is working towards a fair resolution for affected customers.
On its website Borderless mentions that it is not a broker- dealer nor an investment advisor and through its subsidiary stockbroker Stockal Securities Pvt. Ltd., acting as the introducing entity has entered into a clearing agreement with DriveWealth LLC., to offer U.S. equities on its investing platform. “As such, Borderless Investing makes no warranties or representations, express or implied, on products and services offered through its website/platform. It accepts no liability for any damages or losses, however, caused in connection with the use of related services,” read the note.
While the victims claimed they were first introduced to Stockal through HDFC Securities, the brokerage firm stated that although they partnered in 2019 as a referral partner, they were not involved in customer onboarding or trade execution.
“We introduced the offering to our clients and referred them to the platform. We did not carry out onboarding or execution ourselves and the same was also informed to the clients. The operational tie-up with Stockal concluded in July 2024,” said a HDFC Securities’ spokesperson in response to Business Standard’s email queries.
