Broker should call up the client ask him to submit margin money Within a day or so failing which shares would be sold
it is responsibility of client to maintain adequate margin with the broker
Wrongful selling of shares by broker
If anyone is in a margin call for lets say couple of lacs, and the market opens at a 10 percent lower circuit. Does the broker has right to sell off shares as collateral immediately when markets are trading at lowest values of the day early in the morning or does he need to call up the client to do the needful before the cut off time to clear margin that day? Is he justified in selling shares at 10.30 in the morning with the lowest value of shares just because he wants to make his risk nill? Just because brokers have the power of attorney of all clients, is it justified that they sell whatever and whichever value that suits them but not the client?
Asked 4 years ago in Consumer Law
13 Answers
He shouldn't sell unless the client is temporarily unavailable or there is some problem. It is tge client's money and his decision is final.
The said act is cheating you can prosecute him for offence of cheating
Yes broker can sell.
The power of attorney obtained by the brokers from the clients in advance gives them immense power to tackle the situation which may appear critical.
There is no hard and fast rule about the procedures to be adopted by the broker in such circumstances.
You can neither agitate nor object to the acts of the broker.
The broker will always be concerned about his security and he may not show any interest towards the client's financial condition.
In fact the immediate action by the broker in this regard would actually save the client from facing more and more disaster, thus actually the broker is coming to the rescue of the client by not making the client losing any further.
You cannot take any legal action against the broker for this act.
Not Justified by the Broker and it is illegal.
Pl issue legal notice and get clarification from the broker.
If not settled then Please go for Arbitration proceedings against the Broker and get your matter heard and settled by the Arbitrator.
1. When a demat account is opened by an individual with a broker he executes a GPA in favour of the broker to authorise him to perform various acts such as buying and selling of shares for and on behalf of the account holder. This is where the brokers derive their power from to sell the shares.
2. It is not stated ordinarily in the POA that broker shall inform the account holder before selling the shares if margin money is not available in the account. It is the duty of client to keep sufficient margin money in his account.
3. There is very little that can be done by the client.
Please file a criminal complaint with the police department for this forgery.
Dear Sir,
The broker is required to act with due diligence and as per the provisions of power of attorney. The power of attorney need to depict all the facts in this regard.
When broker is selected, authority is provided to deal in best interest of client. In your case, dealing at lower profit or loss itself suggest poor judgement of broker and in such cases, prior intimation to client is necessary.
This is not Speculation but poor step agaisnt the interest of client.
Demand refund, failure to which complain to SEBI.
1. Typically the Broker must take Client's consent to square off or to take commitment to receive payment. This is usually followed by most brokers to maintain Client's good will.
2. SEBI has issued instructions about compulsory square off margin amounts, which must be maintained with the registered broker and this is liability of the Client without any reference to the Broker.
3. In your case, apprehensively the broker anticipated further fall and short of margin money in your account and must have square off leading to the losses. This could be avoided by a courtesy call from broker, but this depends how much prudent the broker is.
if you have a type of discretionary account for which you have signed documents giving the broker permission to buy and sell securities for your portfolio on your behalf, then your broker may sell from the account.May
Broker cannot make trade on behalf of his client without his consent.
Broker is bound to provide profits to his client As per power of attorney and he cannot sell the shares at any time to clear his own risk.
