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From 2008 to Today: A Stock Market Journey, a Karvy Nightmare, and the Lessons I Learned
In my personal experience, I have been in the stock market since 2008.
I originally had a trading and Demat account with Karvy Stock Broking. At that time, a lot of the transactions were handled through what was called a pool account. Shares would remain in the pool account, and when they were transferred to the Demat account, we had to physically submit a delivery instruction slip every time.
To avoid all this hassle, the broker would tell us, “You can keep your shares in the pool account. Whenever you need to sell them, we will sell them and give you the money.”
Unfortunately, that trust cost me dearly.
Karvy allegedly used shares held in clients’ pool accounts as collateral to raise loans from banks and used the funds for its own businesses. Eventually, SEBI took action against Karvy Stock Broking.
I filed complaints with SEBI and also through the relevant investor grievance platforms. I contacted NSE, BSE and SEBI several times and sent numerous emails. Even today, I have not recovered my money or shares.
Years of savings that I had accumulated little by little since 2008 were effectively lost in a single episode.
People often say that SEBI exists to protect investors and help them in situations like this. In my experience, however, that protection does not always work as people expect.
I also accept that I made a mistake. I failed to make sure that my shares were transferred from the pool account to my own Demat account. I paid a price of several lakhs for that mistake.
After the Karvy episode, many of the people who had worked there moved to Motilal Oswal. They approached me and encouraged me to open an account there. I was told that my Karvy shares would somehow be transferred to my Motilal Oswal account.
That never happened.
Instead, I was encouraged to deposit money and start trading, with assurances that things would be sorted out soon. After a few years, that team itself moved from Motilal Oswal to another stock broking company.
And I was still left behind with the same unresolved issue.
I continued with Motilal Oswal for some time, but I found their charges quite high. Later, I opened an account with Angel One.
After completing a trade, the contract note would show relatively small charges. But when the money finally reached my bank account, there would sometimes be additional charges running into hundreds or even thousands of rupees. It wasn't always clear to me what exactly those additional charges were for.
After losing several thousand rupees in such charges, I eventually moved away from there as well and took refuge in Zerodha.
These days, I don't trade actively. I don't do intraday trading and I stay away from options. I prefer to select good stocks and wait for the long term.
Now I am thinking about spreading my investments across three different types of brokers — perhaps keeping smaller amounts with each:
• Bank-backed stock brokers
• Traditional full-service brokers
• Discount stock brokers
The idea is simple: if one brokerage company ever fails or something goes wrong again, I don't want my entire investment to be exposed to the same risk.
After what happened with Karvy, I don't think I can go through another experience like that.
Whether I am waiting for more wounds or for some rewards this time, only time will tell.
I would really appreciate hearing your thoughts, experiences and advice. If you have had similar experiences with stock brokers, or if you have a different perspective on keeping investments across multiple brokers, I’d be very interested to hear from you.
I’m looking forward to learning from your experiences and opinions.