Handing over shares to a broker for fixed return may land you in trouble

Brokers are supposed to report, on a weekly and monthly basis, the shares of clients that they hold

An ex-parte order issued recently by the Securities and Exchange Board of India (Sebi) against New Delhi-based Modex International Securities has once again brought to the fore the risk clients run when they hand over their shares to their stockbroker against the promise of a fixed return. The broker pledged his clients’ shares as margin and traded in the futures and options (F&O) segment. He sustained losses, as happens often in such cases. And now it is his clients who have to bear the brunt.      

Brokers are supposed to report, on a weekly and monthly basis, the shares