do not sign Power Of Attorney in Brokers favour. It is Optional as per SEBI

Most of the  unauthorised transactions are conducted by Brokers under the guise of POA. It is preferable not to sign POA and instead insist on using your discretion to render delivery for shares sold through Transfer Instructions for Delivery slip so that you have control over transactions

do you check your DP statement closely ?

The Broker might be using your Shares as a collateral without your knowledge. Do check regularly and complain to broker in writing with a copy to  NSDL & CDSL

do you periodically scrutinise your Ledger statement given by Broker ?

Investors should pro-actively scrutunise Ledger accounts and complain to Broker in writing about discrepancies immediately

Do not authorise Broker to send Contract notes by email

Often Brokers take advantage of  ECN Authorisation. Either they do not send you password to access their web site or ECN do not open up. You remain ignorant about trades taking place behind your back . Sudedenly, one fine morning , Brokers tell you that there is large debit in your trading account. It is preferable to insist on physical delivery of contract notes and if you do not receive contract note within 24 hrs, you must complain in writing and disown the transaction if you smell fish. 

KYC / Account Opening form / Member Client Agreement scrutinise before signing

Most Brokers have outsourced the task of  registering new accounts.of Investors These marketing men have no idea of SEBI & Exchange Rules for KYC . These people are paid commission out of the Account opening fees collected by Brokers.  This has led to many unethical practices. Investors are lured to invest hard earned moneys which are often mis-used by Brokers.
It is observed that MCA's contain many clauses which are not approved by SEBI.
Some of the unethical practices are:
1. While filling in A/c opening form , the box for Cash Segment and  Derivatives segment are intentionally kept unticked. .These are ticked by Brokers after obtaining Investors signature
2. The risk assessment / risk profile is also kept blank
3. Power of Attorney is OPTIONAL but Brokers obtain signatures without the knowledge of Investor.    

BEWARE WHILE SIGNING MEMBER CLIENT AGREEMENT

I have appeared before Investor Grievances Cell and Arbitration Tribunals of  Stock & Commodities exchanges During the course of defending the Investors in  Arbitration proceedings before BSE, NSE & MCX , I have come across many instances where the innocent and unsuspecting Investors/ Clients are found to be cheated by Brokers. In many cases , the Brokers created losses amounting to lakhs , without the knowledge of the Investor.
I shall try to educate fellow Investors through this blog.
Some of the cases handled by me have following common histories:
1. Brokers approach new Investors promising lucrative returns to Investors. They provide Account opening KIT which contains bulky forms, requiring over 70 signatures .  Investor signs KYC & Agreements & Power of Attorney's  blindly . Brokers fill in the form subsequently with whatever is convenient to them. Later on Brokers mis use the POA for selling or pledging shares lying in DEMAT account without the knowledge of Investors and claim losses actually created by brokers through unauthorised trading. Brokers then file Arbitration proceedings and obtain Awards in their favour.
2. New Investors inadvertantly tick on Derivative segment , Brokers create big losses and claim large amounts .  Investor must take following precaution:
1. Do not sign on dotted lines any blank Agreements / POA's. Insist on the KYC / MCA to be filled in before you sign the same. Always obtain  zerox copy of each and every document immediately after signing. . Do not believe Broker when he assures copy afterwards. Demand copy of all forms , by letter in writing if you do not receive copy within seven days