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'Dabba traders' earning notoriety

business Updated: Oct 15, 2007 01:36 IST
Ravi Bajpai
Ravi Bajpai
Hindustan Times
Highlight Story

The next time you decide to invest your hard-earned money in stocks, do check the credentials of your broker. A retired Jamia Millia Islamia Reader has allegedly lost over Rs 2 lakh at the hands of a 'dabba' trader.



Under the country's laws, no trading in stocks can take place without being recorded with stock exchanges. Illegal trading, known as 'dabba' trading, involves brokers working like parallel stock exchanges, recording with official bourses only a part — and sometimes not even that — of the trades that they do.



The Delhi Police say such incidents have increased of late. Retired Reader Sadiqua Zaki, a widow, was on the receiving end of the fraud. She reportedly invested Rs 2.1 lakh with a Connaught Place-based finance company. She invested the money in three parts, initially for a year. She approached the company when her investment was about to mature but the broker did not return her money. "He said the investment yielded good results and gave me a rosy picture. He asked me not to withdraw the money and I agreed," Zaki has alleged.



She subsequently visited the broker some months later and asked him for the maturity amount.



"He told me the investment was doing good and that I should continue with the investment. I wanted money for my child's higher education and declined the offer," she has alleged.



The broker allegedly told her to collect the money later and continued to ignore her for several days. "I made several visits to the company but I still haven't received my money," she said.



Police have registered a case of cheating and criminal breach of trust and investigations are on, an officer said, adding a warning has already been sounded off to investors. Brazen, high-tech dabba traders have now adopted state-of-the-art techniques and the fraud is being committed through computers using proxy software.



How to protect yourself


Always pay the broker by cheque or demand draft. Those who want to invest cash are most likely to be duped, as there is no proper record of these transactions.



When a broker purchases or sells shares on your behalf at the National Stock Exchange, he has to enter your client code. The transaction is then recorded. The broker should give you a contract note listing the details of the transaction within 48 hours. Using your client code, you can check this information on NSE's website after 72 hours of the transaction.