Settle Your Scores With Broke Brokers

Investor grievance redressal gathers importance with more and more brokers defaulting. Sebi launches an online complaint filing and tracking facility for the ease of investing in the market.

- Yagnesh Kansara

After the first wave of Coronavirus onslaught tamed down, stock markets in most major economies rebounded from an unprecedented global slump towards the end of last year. The media too went on an overdrive to boost investor sentiment with stories of bull run. The outbreak of the second wave of the pandemic around March 2021 made the markets volatile, putting the economic recovery in uncertainty.

The economic and financial conditions set the ideal backdrop for spurious agents to mis-sell products across various segments of the capital market and insurance. Such volatile markets also put at risk the investments of thousands of people. In Mumbai alone, more than 20 stock brokers had defaulted last year, leaving investors under stress as they fought to regain their hard-earned money.

Brokers lure investors showing the bright prospects of trading in equities. Once the investor is in, without knowing his risk appetite, he invests in futures and options (F&O) segment. This is nothing but a way of mis-selling. Trading in the derivatives segment is considered a risky proposition for an average investor who is not even conversant with the simple cash market trading.

“The Securities and Exchange Board of India (Sebi) should put such measures in place that retail investors are not allowed to trade in F&O unless he gains proper and adequate knowledge of the subject. Also, it should fix certain upper age limit, say persons above 60 years of age, who do not understand intricacies of such trades, should be barred from trading in derivatives,” says Jagdish Bhatt, an advocate practising securities markets law in Mumbai.