Broker illegally siphons of Rs.344 crores worth of mutual funds belonging to Odisha Cement - part of the Dalmia Bharat Group

Here’s something you don’t hear every day. Dalmia Bharat filed a complaint stating

Mutual fund units, valued at approx. Rs. 344 crores have been illegally and unauthorisedly transferred by the Depository Participant (‘DP’) from the demat account(s) held by our erstwhile subsidiaries, OCL India Limited (‘OCL’) and Dalmia Cement East Limited (‘DCEL’).

The broker (depository participant) in question is Allied Financial Services Private Limited. There are also other allegations against the broker regarding the misuse of client funds and securities. Here’s the interim order by SEBI in this matter.

There is a PUBLIC NOTICE given by company on the matter.

Doesn’t it possess risk on capital market ecosystem and other brokers too.
How should one as a client be safe that his holdings and fund balance is safe -be it with any broker.

This is the risk of trading with chillar unknown brokers. Best to stick the tried and tested names, who have been around and have proven themselves.

@Prakhar_Agrawal : this may be the risk with demat accounts where POA is given to broker for operations. Few years back there was a big scam involving m. oswal on similar pattern. my view is such because i always held demat account with a cooperative bank and no POA is given .

That means keeping holdings in bank such as SBI is safer then keeping it with brokers like Zerodha or Upstox.

This is my view but in such a system you have to give manual ( through nsdl SpeedE or cdsl Easi as the case may be )delivery on sale . moreover securities are always with nsdl or cdsl ( safe )in any system but problem may develop when POA is given to broker for account operation.

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It seems that there is huge risk associate with investments in mutual funds and this case shows it. There is necessity that each fund is carefully investigated and checked prior to placing your money with it