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
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
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