Investing in US stocks through Indian apps? Know how to transfer your holdings and raise complaints

Their US stocks do not automatically become inaccessible or disappear. The next steps depend on where the securities and cash are held, how the account is structured, and whether investors can access the underlying US brokerage account directly. "In principle, an investor does not lose ownership of their U.S. shares simply because the Indian platform shuts down, provided the assets are properly held through a separate brokerage or custody arrangement.

The Indian platform typically facilitates access rather than holding the underlying securities/ funds itself. In such a situation, the shares and cash should continue to remain with the relevant broker or custodian," said Sanjit Singh Paul, smallcase manager and Managing Director, Modulor Global. Your stocks may remain with the US broker When an investor buys US stocks through an Indian app, the app may act as the interface connecting them to an overseas brokerage firm that holds the securities.

For instance, if an Indian app shuts down, your assets remain safe because they are held securely by DriveWealth/Alpaca; however, you cannot trade directly on DriveWealth/Alpaca and must instead transfer your account to another broker or request a liquidation. The process may differ across platforms, depending on their arrangements with overseas brokers and custodians. "Accessing or transferring shares could involve operational inconvenience.

If the investor maintains an individual U.S. brokerage account, they may be able to contact the broker directly and request access or initiate a transfer. Under an omnibus arrangement, the process may be more complicated and could require cooperation from the intermediary or its administrator," said Paul. An individual brokerage account can make it easier for investors to contact the overseas broker directly.

Under an omnibus arrangement, where assets are held collectively through an intermediary, investors may need additional documentation and assistance to establish their holdings and transfer them. Can you transfer your US stocks to another broker? Eligible whole shares can generally be transferred to another compatible US brokerage account, subject to the receiving broker's acceptance and applicable transfer procedures.

However, fractional shares such as owning 0.5 shares of a company generally cannot be transferred. Investors may have to sell these holdings and move the proceeds as cash. Investors should also check whether their new broker accepts transfers from their existing overseas broker and whether any fees or additional documentation are required. "Eligible whole shares can generally be transferred to another compatible US brokerage account through ACATS or Automated Customer Account Transfer Service.

It is an electronic system in the United States used to transfer financial assets and securities smoothly between brokerage firms or banks managed by the DTCC (Depository Trust & Clearing Corporation), subject to the receiving broker’s acceptance, account eligibility, and applicable transfer procedures and fees," said Madhupam Krishna, SEBI RIA and founder of WealthWisher Financial Planners & Advisors.

"Fractional shares, for example, 0.5 shares of a company, generally cannot be transferred through ACATS. Depending on the broker, the investor may need to sell the fractional portion and transfer the resulting cash, or the delivering broker may liquidate the fractional position during the transfer process," said Krishna. What if the US broker shuts down too? The situation becomes more complicated if the overseas brokerage firm holding the securities also fails.

In such cases, eligible customer assets may receive protection under the US Securities Investor Protection Corporation (SIPC), subject to applicable conditions and limits. “If the underlying US broker also fails, SIPC may help return missing customer securities or cash, up to $500,000 per customer, including up to $250,000 in cash. In practice, customer accounts at a failed US broker may also be moved to a successor or acquiring broker, but investors should not assume uninterrupted access in that case.

They should retain account statements, trade confirmations, and tax documents. They should note down the US broker name, account number, and customer agreement,” said Krishna. SIPC protection is not insurance against investment losses caused by falling share prices. It is intended to help eligible customers recover missing assets when a member brokerage firm fails. Where can investors complain? If the overseas broker fails to resolve a grievance, Indian investors can approach the relevant US authorities, including the Financial Industry Regulatory Authority (FINRA) and the US Securities and Exchange Commission (SEC), depending on the nature of the complaint.

FINRA is generally a relevant route for complaints concerning broker conduct and disputes, while the SEC handles complaints involving suspected securities-law violations or fraud. However, regulatory complaints do not guarantee recovery of an investor's money, which may require arbitration, litigation or applicable investor-protection processes. For complaints against an Indian platform, investors should first approach its grievance officer.

If the platform is a SEBI-registered intermediary, they can escalate the complaint through SEBI's SCORES portal at scores.gov.in. For investments routed through India INX, investors can use the exchange's grievance mechanism by emailing inx.regulatory@indiainx.com, submitting a physical complaint or following the exchange's prescribed process. They can also approach the Complaint Redressal Appellate Officer if they are dissatisfied with the resolution.

“No doubt that these platforms have democratized access to US equities, but the convenience is created by bundling several regulated processes, FEMA/LRS, foreign brokerage, custody, FX, and taxation, into one app. The investor’s due diligence should therefore go beyond the app’s interface and focus on the full cross-border chain,” said Krishna.