Zerodha - Exposed 1000 Crore Algo Scam

From:Utsav Kapoor ([email protected])

To:[email protected]; [email protected]; [email protected];
[email protected]
Cc:[email protected]; [email protected]; [email protected];
[email protected]; [email protected]; [email protected]; [email protected];
[email protected]; [email protected]; [email protected]; [email protected];
[email protected]; [email protected]
Date:Monday, 26 July, 2021, 05:05 am IST
To,
The Compliance Officer and CEO Mr. Nithin Kamath,
Zerodha Broking Ltd

Sir,

This email correspondence has successfully exposed the stock market scam - retail
algo trading - to the tune of 1000 crores. This scam is led by cartel of Brokers, and
Sub-brokers who operate as Algo Providers (ATS). I was victim of this scam, lost Rs.
30 lakh, and eventually consulted a NSE Auditor to send email correspondence for
proving violations. Attached details on fraud with my preliminary investigation
as a investor.

This email correspondence also proves how you are leaking clients financial
transactions data(buy/sell orders) to shady algo platforms, which has resulted
in front-running, churning and spoofing stock prices. Dutiful authorities from NSE
and SEBI have been kept in loop for prima-facie investigation and action against
you. The complete email correspondence being a important matter of public interest
are being forwarded to Journalists and Press, Law Enforcement Authorities and
Legislators.

Even though I asked queries repeatedly as per trail email, they are listed again for
summary. Algo Software like Stoxxo/Tradetron/Algomojo are being sold/promoted to
investor clients with following questionable features. The said application are
operated as IBT, authorized by your trading API.

1. Algo Software does not require the investor to login daily basis without entering
login credentials given by the broker. Is this method of operation allowed?

2. A investor could have trading account with more than one broker. Algo
Software acts as an aggregating trading application ( single application providing
facility to connect and login to more than one broker simultaneously) providing a
single investor to select a broker for each order.

3. It is observed that on a single device (laptop, tablet, mobile) multiple trading

accounts are being used. Algo Software acts as a single application that allows
aggregating multiple trading accounts and place order for them just like a dealer
terminal.

4. As advertised on your website, you provide API for programmers. However, as

per NSE guidelines, any software from which orders originate should be approved
with NSE. You have not put a approval system in place for your APIs. You did not
ask your API subscribers to send screenshot of the program they are using, to
disallow such algo trading apps. A simple google search on algo trading shows many
such apps. This shows the massive level on which violations are happening. As a
NSE Member regulated by SEBI, you are responsible to not allow any API
technology which openly and extensively violates investor interests. What are the
compliance you follow to protect investor interests from your faulty API technology?

Yours Sincerely
Utsav Kapoor

On Friday, 23 July, 2021, 09:17:49 am IST, Utsav Kapoor <[email protected]> wrote:

Reminder 3- This email is an attempt to expose the retail algo trading scam. Kindly
reply to my technical query completely. A delayed or no response from your side
indicates that such facility is being promoted to clients with your consent, for further
perusal of the matter. The matter is not a personal complaint but of public interest;
and, may be forwarded to Journalists and Press, Law Enforcement Authorities and
Legislators if appropriate reply not received.

To,
The Compliance Officer
Zerodha Broking Ltd

Sir,

Algo Software like Tradetron/Algomojo/Stoxxo for algo trading are being

sold/promoted to your investor clients with following questionable features. The said
applications are operated as IBT, authorized by your trading API.

1. Tradetron does not require the investor to login daily basis without entering login
credentials given by the broker. Is this method of operation allowed?

2. A investor could have trading account with more than one broker. Tradetron acts
as an aggregating trading application ( single application providing facility to connect
and login to more than one broker simultaneously) providing a single investor to
select a broker for each order.

3. It is observed that on a single device (laptop, tablet, mobile) multiple trading

accounts of family members are be being used. Tradetron acts as a single
application that allows aggregating multiple trading accounts and place order for
them just like a dealer terminal.

As per trail email, you replied that you "provide kite connect API on a subscription
basis for programmers". However, as per NSE guidelines, any software from which
orders originate should be approved with NSE. You have not put a approval system
in place for your APIs. You did not ask your API subscribers to send screenshot of
the program they are using, to disallow such algo trading apps.
A simple google search for Zerodha Algo Trading gives 100s of such apps. This
shows the massive level on which violations are happening. As a NSE Member
regulated by SEBI, you are responsible to not allow any API technology which
openly and extensively violates investor interests.

With such violations happening at mass level, kindly reply about the compliance you
follow to protect investor interests from your faulty API technology.

Yours Sincerely
Utsav Kapoor

On Wednesday, 21 July, 2021, 03:44:47 am IST, Utsav Kapoor <[email protected]> wrote:

Reminder-2 Kindly reply to this email at earliest. A delayed or no response from your
side indicates that such facility is being promoted to clients with your consent, for
further perusal of the matter. The matter is of general public interest, and may be
forwarded to Journalists and Press, Law Enforcement Authorities and Legislators if
appropriate reply not received.

To,
The Compliance Officer
Zerodha Broking Ltd

Sir,

A software called Stoxxo (also mentioned as algobaba) for algo trading is being
sold/promoted to your investor clients with following questionable features at Rs. 750
per month. The said application Stoxxo is operated as IBT, authorized by your
trading API.

1. Stoxxo does not require the investor to login daily basis without entering login
credentials given by the broker. Is this method of operation allowed?

2. A investor could have trading account with more than one broker. Stoxxo acts as
an aggregating trading application ( single application providing facility to connect
and login to more than one broker simultaneously) providing a single investor to
select a broker for each order.

3. It is observed that on a single device (laptop, tablet, mobile) multiple trading

accounts of family members are be being used. Stoxxo acts as a single application
that allows aggregating multiple trading accounts and place order for them just like a
dealer terminal.

As per trail email, you replied that you "provide kite connect API on a subscription
basis for programmers". However, you have not put a approval system in place for
your APIs. You did not ask your API subscribers to send screenshot of the program
they are using, to disallow algo trading apps such as Stoxxo.
A simple google search for Zerodha Algo Trading gives 100s of apps like Stoxxo.
This shows the massive level on which violations are happening. As a NSE Member
regulated by SEBI, you are responsible to not allow any technology which openly
and extensively violates investor interests.

With such violations happening at mass level, kindly reply about the compliance you
follow to protect investor interests from your faulty API technology.

Yours Sincerely
Utsav Kapoor

----- Original message -----

From: Utsav Kapoor <[email protected]>
To: [email protected] <[email protected]>; [email protected]
<[email protected]>
Cc: [email protected] <[email protected]>
Sent: Monday, 19 July, 2021, 07:15:22 am IST
Subject: Zerodha - Retail Algo Trading Violating NSE Norms

To,
The Compliance Officer
Zerodha Broking Ltd

Sir,

A software called Stoxxo (also mentioned as algobaba) for algo trading is being
sold/promoted to your investor clients with following questionable features at Rs. 750
per month. The said application Stoxxo is operated as IBT, authorized by your
trading API. Please advice whether it be being done in your knowledge and with your
consent.

1. Stoxxo does not require the investor to login daily basis without entering login
credentials given by the broker. Is this method of operation allowed?

2. A investor could have trading account with more than one broker. Stoxxo acts as
an aggregating trading application ( single application providing facility to connect
and login to more than one broker simultaneously) providing a single investor to
select a broker for each order.

3. It is observed that on a single device (laptop, tablet, mobile) multiple trading

accounts of family members are be being used. Stoxxo acts as a single application
that allows aggregating multiple trading accounts and place order for them just like a
dealer terminal.

Kindly reply to this email at earliest. A delayed or no response from your side will be
assumption that such facility is being promoted to clients with your consent, for
further perusal of the matter. Above information on Stoxxo for trading in the UCC
provided by you is available on internet easily.

Yours Sincerely
Utsav Kapoor

On Monday, 19 July, 2021, 12:03:15 pm IST, Zerodha Support <[email protected]> wrote:

Dear Utsav Kapoor,

Thank you for writing to Zerodha.

Stoxxo or algobaba are not our product and we strictly do not recommend such third-
party trading tools or automation software using APIs.

We provide kite connect API on a subscription basis for programmers please refer
to https://kite.trade/terms

Note: We are operating under our COVID-19 contingency plan for business continuity
and the safety of our team. Over 1200 members of our team are working from their
homes. Read more.

Please get in touch with us if you need any other information through our Support
Portal or by calling us on 080-47181888

Team Zerodha
Sreenivasulu M

If you are a Zerodha Account holder, click here to view the status of the ticket. If you don't
have an account, you can follow-up on this ticket by replying to this email.
Zerodha (C) 2021 - 153/154, 4th Cross Dollars Colony, J.P Nagar 4th Phase, Bangalore -
560078
• 0Algo Scam details by Utsav Kapoor.txt
12.9kB
• 0List of ATS not approved by NSE.txt
 1.1kB
• List of NSE TM promoting Algo.txt
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• Ref-1 Tradetron Newsletter-1.PNG
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• Ref-2 Zerodha Algo Approval.PNG
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• Ref-3 Angel Broking Recommends.PNG
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• Ref-4 Algomojo SB.PNG
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• Ref-4 Umesh Ranglani Tradetron.PNG
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• Ref-5 Tradetron Auto Login.PNG
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• Ref-6 Stoxxo Multiple Accounts.PNG
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• Ref-6 Tradetron Multi Accounts.PNG
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• Ref-7 Tradetron Newsletter-3.PNG
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• Ref-8 Platform Subscription Fees.PNG
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• SEBI sub brokers.PNG
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• tradetron july newsletter-2.PNG
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• tradetron strategy recommendation.PNG
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• Why Is SEBI Reluctant To Regulate Retail Algos.txt
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