Inside 'Rs 100 Crore Stockal Scam': Apple, Nvidia Shares Swapped With Chinese Stocks Without Investors' Consent?

Nearly 30 Indian investors have alleged that their US stock portfolios were sold without their permission on a digital platform used to invest in overseas markets. The proceeds, they claim, were then used to buy shares of a little-known Chinese company. Subsequently, the stock of that Chinese company crashed. This left investors exposed to losses estimated at more than Rs 100 crore.The incident has triggered complaints to market regulators in India and the US. At the centre of the allegations is Stockal Securities, a Bengaluru-based fintech platform that helps Indian investors access US stocks. Investors say their holdings in companies such as Apple, Nvidia, Amazon, Tesla and Alphabet were liquidated on October 15, 2026, without authorisation.The money was allegedly redirected into Zhibao Technology Inc., a thinly traded Chinese company listed in the US. The incident has raised a bigger question than the losses themselves: How could investors' portfolios be sold and replaced with a completely different stock without their consent? And who is responsible for restoring their money?Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better PayStockal 'Scam': What Exactly Happened On October 15?The alleged fraud centres on a series of transactions that investors say took place on October 15.According to Moneycontrol, affected investors discovered that their portfolios had undergone a drastic change. Stocks they had accumulated over time were sold. The proceeds were then used to purchase large quantities of Zhibao Technology Inc., which trades on Nasdaq under the ticker ZBAO.The transactions were allegedly executed without investors placing the orders or authorising the changes. Here's how the alleged transactions unfolded:-Step 1: Blue-chip stocks sold: Apple, Nvidia, Amazon, Tesla, Alphabet and AMD holdings were allegedly liquidated.Step 2: Sale proceeds redirected: Investors claim the money from their stock sales was used to fund fresh purchases without their consent.Step 3: Zhibao Technology purchased: The money was allegedly used to acquire millions of shares of a relatively illiquid Chinese company.Step 4: Investors suffer losses: Zhibao shares fell sharply, wiping out a substantial portion of the money invested in the alleged unauthorised purchases.The Rs 100 Crore Loss: What Investors Say They LostMoneycontrol spoke to investors who described substantial losses following the alleged transactions. The preliminary estimate of losses exceeding Rs 100 crore is based on information provided by two investors. It is not an independently verified calculation of losses across all affected accounts. Here are the two accounts that illustrate the scale of the incident:-Case 1: Rs 4.26 crore loss after Apple, Nvidia and other stocks were soldOne affected investor, a senior official at a leading beverage company, said that 10 of his major US stock holdings were liquidated. The stocks included Apple, Tesla, Amazon, Alphabet, Nvidia and AMD. The holdings were sold for approximately $335,768. The entire amount was allegedly used to purchase 300,000 shares of Zhibao Technology at an average price of $1.05 per share.The investor estimated his losses at approximately $450,000, or Rs 4.26 crore. He also alleged that he did not receive the usual individual trade confirmations or warnings for the transactions. The investor said that Borderless, Stockal's parent entity, contacted him on October 18. The communication reportedly acknowledged suspicious account activity on October 15 and said DriveWealth had restricted activity. The investor has approached SEBI and the US Securities and Exchange Commission (SEC), seeking intervention and compensation. Case 2: Rs 29 crore portfolio allegedly liquidated within minutesAnother investor alleged that securities worth $3.1 million, or approximately Rs 29 crore, were sold without authorisation. The investor claimed that the entire portfolio was liquidated within two minutes. The proceeds were then allegedly used to purchase 30.5 lakh shares of a thinly traded stock within 15 minutes. The investor alleged that the transactions took place without verification, notification or an opportunity to intervene. The investor also said that the account had not been restored and the losses had not been reimbursed. An FIR was registered in Bengaluru in connection with the complaint.Rs 100 Crore Stockal 'Scam': Why Zhibao Technology?Zhibao Technology Inc. is a Chinese company listed on Nasdaq. Its shares are relatively thinly traded compared with major US technology companies such as Apple and Nvidia. According to Moneycontrol, the investor who allegedly bought 300,000 shares acquired them at an average price of $1.05. The stock subsequently declined nearly 60%, closing at $0.42 on October 23.Zhibao Technology: Reported Price MovementFactorFigureReported purchase price$1.05October 23 close$0.42Decline60%The sharp decline meant investors were exposed to a stock they say they never intended to own. The decline in Zhibao's price is a market event. The allegation that the shares were purchased without authorisation is a separate matter that investigators must establish.The actual losses will depend on the quantities purchased, execution prices, subsequent transactions and the value of any remaining holdings.Who Is Stockal And How Does It Work?Stockal Securities is a Bengaluru-based fintech platform registered with SEBI as a stock broker. It enables Indian investors to access US stocks, exchange-traded funds and other overseas securities.The platform provides an India-facing interface for account funding, trading and portfolio tracking. For overseas investments, Stockal works with US-based brokerage and clearing partners, including DriveWealth LLC.This means an investor's experience involves more than one entity. The platform through which the investor accesses the portfolio may not be the same entity that executes the trade or holds the securities in custody.'No Funds Were Withdrawn': StockalResponding to the report, Borderless (Stockal parent company) has issued a statement saying, "Recent reports about unauthorised trading activity in certain customer accounts on Stockal, our US equities trading platform, have raised understandable questions. We want to clarify the facts & explain how we are supporting affected customers. On October 16 (India time), October 15 during US market hours, our US brokerage & custody partner, DriveWealth, notified us of unauthorised trading activity in 13 customer accounts. Access to these accounts was restricted shortly thereafter to prevent further activity."It added, "An unauthorised third party appears to have accessed 26 customer accounts using valid login credentials. In 13 of those accounts, existing large-cap US equity holdings were sold and the proceeds used to purchase thinly traded microcap securities. Based on our investigation to date, no funds were withdrawn."The platform further said, "Our investigation has found no evidence of a breach or compromise of the Borderless platform, interface, infrastructure or internal systems. We have engaged independent cybersecurity specialists to examine our systems. We believe the affected account holders may have been victims of a social engineering attack involving information exposed in another company's data breach several weeks earlier. However, this connection remains unconfirmed and under active investigation."Why HDFC Securities Is Being MentionedHDFC Securities partnered with Stockal in 2019 to launch its global investing offering through globalinvesting.in. Several investors affected by the alleged incident had been introduced to Stockal through this arrangement.However, HDFC Securities' operational partnership with Stockal ended in July 2024. The alleged unauthorised transactions took place in October 2026, more than two years after the partnership ended.HDFC Securities also issued a statement following the reports. The company said: “The report itself notes that HDFC Securities is not named among the accused in the FIR.” HDFC Securities said customer trust and regulatory compliance remained central to its operations. It added that it would cooperate with regulators and authorities as required and share further updates if appropriate.Stockal's Explanation: Was It A Phishing Attack?Stockal has disputed the suggestion that its own platform was necessarily breached. In an email to Moneycontrol, the company said the circumstances and mechanism of the activity were under investigation.The company said: “Based on our review to date, we have not identified any evidence of a breach of the Borderless/Stockal platform.”Notably, this is Stockal's preliminary assessment. It is not a final finding by an independent investigator.If credentials were compromised, investigators would still need to establish how the attacker obtained access, what authentication controls were in place and how the transactions were authorised or processed.A compromised email account, stolen password or manipulated authentication process could present different security implications.DriveWealth Passes The BuckDriveWealth has also disputed responsibility. In a letter dated October 30 to an affected investor, the US brokerage reportedly said the unauthorised access occurred through the investor's interface with Stockal.It maintained that the activity did not originate at DriveWealth and that security lapses associated with Stockal's platform were Stockal's responsibility.DriveWealth also said it had frozen the affected account after receiving instructions from Stockal. The restriction was intended to prevent further activity while the investigation progressed.In its letter, DriveWealth criticised Stockal's handling of the matter and questioned whether it had acted with the urgency required. Again, these are allegations made by DriveWealth in its communication to an affected investor. They have not been independently established.Who Has Been Named In The FIR?According to the report, an affected investor has registered an FIR in Bengaluru. The entities named include:DriveWealth LLCStockal SecuritiesBorderless Softech Private LimitedBorderless Investing Inc.HDFC SecuritiesThe FIR follows allegations that investors' accounts were accessed without authorisation and their holdings liquidated. However, being named in an FIR does not establish guilt.HDFC Securities has specifically pointed out that it is not named among the accused in the FIR, according to its statement supplied for this report.