INJUSTICE.. please help

[izzner]

My cousin had purchased shares worth 3.5 lakhs through icicidirect. He had gone long on reliance natural by pledging securities worth 1.5 lakhs with icicidirect. Now on recent market lower circuit(somewhere on jan 15 2008) icicidirect closed squared his long position on the lowest rate of the day so now his account showed a debit of 3 lakhs cash. Icicidirect sold off the shares of 1.5 lakhs pledged with it and also pulled in the shares not pledged with icici (3.5 laks -1.5 lahkhs =2 Lakhs). I mean is it legal for them to pull shares not pledged with them....????


Also his inspite of taking all his shares icicidirect is showing a negetive balance of 54000/-. Now what should my cousin do...????

 

[su203]

My cousin had purchased shares worth 3.5 lakhs through icicidirect. He had gone long on reliance natural by pledging securities worth 1.5 lakhs with icicidirect. Now on recent market lower circuit(somewhere on jan 15 2008) icicidirect closed squared his long position on the lowest rate of the day so now his account showed a debit of 3 lakhs cash. Icicidirect sold off the shares of 1.5 lakhs pledged with it and also pulled in the shares not pledged with icici (3.5 laks -1.5 lahkhs =2 Lakhs). I mean is it legal for them to pull shares not pledged with them....????


Also his inspite of taking all his shares icicidirect is showing a negetive balance of 54000/-. Now what should my cousin do...????

When will people learn that playing futures and option is like playing with fire. You will get badly burned in case of crashes like what happened during mid January. Every experts says that you should play the derivative market with just 20% of the profits you have already made from the market which you can afford to loose in worst case scenerio. Now your cousin has no option but to pay off the money to icicidirect.

 

[roro1234]

Wwowwwww..can they do that? is it legal for them to pull shares which are not pledged with them,Can some laywer in the members list answer this , as it will be helpful to all.

 

[izzner]

can anyone please help regarding this....

 

[fast_rizwaan]

friend, your friend already signed the POA (power of attorney) which gives them the right to sell, buy, do bank transactions on your friends behalf, whether it is right or wrong, they have the power.

 

[bslk]

It is mentioned clearly in the Derivatives help section that they can do this.

 

[y2j826]

friend, your friend already signed the POA (power of attorney) which gives them the right to sell, buy, do bank transactions on your friends behalf, whether it is right or wrong, they have the power.

thats why peoples always have to read documents while opening an account, POA is always there so they can sell it

And thats true too never ever play in fut & opt, its the worst game one ever can play

 

[marcus]

He hasn't said the trades were in F&O besides nothing wrong in palying futures and options, I only trade futures and options but one must gradually do it, but more important is not to use margin as collateral or use borrowed money. the most imp thing above all else is never overleverage yourself. One should not leverage oneself more than 33% in either case and never have naked options to more than 15% of your account. Actually its best to avoid naked options completely use fiduciary calls if you must trade naked calls.

Nothing your cousin can do in my mind about what ICICIdirect has done but in regard to showing a negative balance of 54000 please check your account statement as to which shares had been sold at what price against the outstanding position he had.

Even then its unlikely ICICIdirect would have made an arithmetical error.

I completely realize its an enormous loss but in my opinion is its also an invaluable education so don't loose heart, markets are the biggest teachers. If we had told you dont trade on collateral or borrowed money or margin you probablly wouldn't have listene (neither would I) until we try for ourselves and see the outcome.

Don't loose heart friend, if you read the market wizards books you'll find the worlds best traders featured there suffered huge losses sometimes wiping them out completely this only reinforced there determination and later in retrospect they've said it was one of the most valuable lessons they learnt.

I have heard much much worse.

 

[kris1208]

thats really shocking, glad im on rmoney and not using icici direct. dont think rmoney does such thing.

 

[izzner]

Even then its unlikely ICICIdirect would have made an arithmetical error.

There is no error from ICICIdirect. They amount of loss has exceeded the value of pledged+unpledged shares. Threfore its is showing a negative balance of 54000/-.. The thing is is my cousin liable to pay the amount(54000/-). Coz logically he had done margin on pledged shares so if there is loss and he cannot settle the loss with cash they will sell the pledged securities. Now if the loss exceeds the value of pledged securities it is their responsiblity to make sure the loss doesnt exceed the value of pledged securites... isnt it..??