Stockal investors say their US shares were sold without consent. The $500,000 cover isn’t built for that
Indians who buy US shares through an app are told their holdings carry $500,000 of US cover. Investors in one such app now say their shares were sold without consent. The cover was written for a different problem.
SIPC, the US body behind the $500,000 cover, steps in only when a member brokerage firm fails and customer assets are missing. It does not pay for a fall in value or for shares bought on someone's behalf. Investors on the Stockal app allege their US portfolios were sold without consent on 15 October 2026, which is a dispute with the firms involved, settled through complaints, arbitration or the courts.
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Nearly 30 investors who bought US shares through the Bengaluru app Stockal say their holdings were sold without their consent on 15 October 2026. Moneycontrol reported the allegations in early November.
One investor told Moneycontrol that holdings worth $335,768, including Apple, Nvidia and Amazon, were sold. The money went into 300,000 shares of a thinly traded Chinese company. Another said $3.1 million was sold within two minutes.
None of this has been proven. Stockal told Moneycontrol its review found no breach of its platform, and that the investors' email or login details may have been stolen through phishing. DriveWealth, the US broker behind the app, wrote to one investor that the activity came through Stockal's side and not its own.
Three names on one account
An Indian buying Apple through an app deals with more than one company.
- The app. It opens the account, takes the orders and shows the portfolio.
- The US broker. In Stockal's case this is DriveWealth LLC, named in reports as the firm that executes the trades and holds the shares.
- Your bank. It sends the money out under RBI's Liberalised Remittance Scheme, which allows each resident up to $250,000 a financial year.
FINRA, the US brokers' self-regulator, keeps a public register called BrokerCheck. It lists DriveWealth, LLC of New York as an active firm, registered with FINRA since 2 December 2013. A search of BrokerCheck for Stockal returns no firm.
So the shares sit with a regulated US broker. The screen, the password and the alerts come from the app.
What the $500,000 covers
SIPC is a non-profit body set up by the US Congress. Its own page says it protects cash and securities held at a SIPC member firm that is "financially-troubled". The limit is $500,000, which includes up to $250,000 of cash. Customers need not live in or be citizens of the US.
| Situation | SIPC's own wording |
|---|---|
| Member broker fails and customer assets are missing | Protected, up to $500,000 |
| Shares fall in value | "does not protect against the decline in value of your securities" |
| Customer is sold worthless shares | "does not protect individuals who are sold worthless stocks" |
| Bad advice from a broker | Not protected |
SIPC says it "only protects the custody function" of the broker. It restores the shares and cash that were in an account on the day a liquidation begins. BrokerCheck lists DriveWealth as active, and no liquidation has been reported.
An unauthorised sale followed by a purchase leaves shares in the account. They are different shares, worth less. Who pays for the difference is a question for the firms, the regulators and possibly a court.
A pattern US regulators have named
FINRA's 2026 Annual Regulatory Oversight Report describes "a new trend" of account takeover fraud. A bad actor gets into an account and sells the investments the owner bought. The money then buys shares of a small company caught up in a pump-and-dump scheme.
In a pump-and-dump, a group drives a small company's share price up and sells to the buyers it has drawn in. The price then falls.
The report does not mention Stockal or any Indian app. The investors' account of 15 October matches its description: large, liquid holdings sold, and the proceeds put into one thinly traded stock that then fell.
Where a complaint goes
FINRA's guidance for an unauthorised trade starts with the firm. It says to question the trade at once and to complain in writing, keeping copies of every letter.
If the firm's answer does not settle it, FINRA takes complaints against member firms. FINRA also runs arbitration for customer disputes. Under its Rule 12206, a claim cannot go to FINRA arbitration six years after the event behind it. The rule leaves the courts open.
The investors have taken several routes, Moneycontrol reported:
- a complaint to SEBI
- an approach to the US Securities and Exchange Commission
- an FIR in Bengaluru naming DriveWealth, Stockal, its parent companies Borderless Softech and Borderless Investing, and HDFC Securities
HDFC Securities partnered with Stockal from 2019 until July 2024.
What isn't settled
- How the accounts were entered. Stockal points to stolen logins. Two investors say they received no alert for the trades.
- Who carries the loss. DriveWealth's letter, as reported, blames Stockal's security. It says its own early attempts to limit the investor's exposure were paused on Stockal's instructions. Neither firm has accepted the loss.
- The total. The figure of over ₹100 crore comes from two investors' estimates. More investors may come forward.
- Which Indian rules apply. SEBI's press releases up to 3 November say nothing on the case. SEBI, DriveWealth and HDFC Securities did not reply to Moneycontrol by its deadline.
What your own records show
A US account statement names the broker that holds the shares. BrokerCheck shows whether that firm is registered with FINRA and lists any disclosures against it.
The app's settings show which trades send an alert and whether a login from a new device needs a second check. Those settings decide how fast an account owner hears about a trade they did not place.
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Questions
- Does SIPC protect Indian investors who hold US shares?
- Yes, in the same way as US residents. SIPC says there is no requirement that a customer live in or be a citizen of the US. Its cover applies when a SIPC member broker fails and customer cash or securities are missing, up to $500,000 including $250,000 of cash.
- Does SIPC cover shares sold from my account without my consent?
- SIPC protects the custody function of a failed broker and does not protect against a fall in value. An unauthorised trade at a broker that has not failed is a dispute with the firms involved, taken up through a written complaint to the firm, a FINRA complaint, FINRA arbitration or the courts.
- What happened at Stockal?
- Nearly 30 investors allege their US holdings were sold without consent on 15 October 2026 and the proceeds used to buy thinly traded shares, Moneycontrol reported. Stockal says its platform was not breached and logins may have been phished. DriveWealth says the activity did not originate at its end. Nothing has been proven.
- How do I check which broker holds my US shares?
- The account statement names the broker. FINRA's BrokerCheck shows whether the firm is registered and any disclosures against it.
- How long do I have to file a FINRA arbitration claim?
- FINRA Rule 12206 bars a claim from arbitration once six years have passed since the event behind it. It does not stop a claim in court.
Sources
- Moneycontrol, Stockal scam: lost money in alleged Rs 100-crore US stock fraud? Where investors can complain (Nov 2026)
- SIPC, What SIPC protects (checked 4 Nov 2026)
- FINRA BrokerCheck, DriveWealth, LLC (CRD 165429, SEC 8-69161; checked 4 Nov 2026)
- FINRA, 2026 Annual Regulatory Oversight Report, Manipulative trading
- FINRA, File a complaint (checked 4 Nov 2026)
- FINRA Rule 12206, Time limits for customer arbitration claims
- RBI, FAQs on the Liberalised Remittance Scheme (updated 6 Apr 2023)
Compound is analysis, not investment advice. Reva Money is not a SEBI-registered investment adviser.
