Is it a good idea to share brokerage account?

If it's your family member's account then it's different thing, assuming one person handles brokerage accounts for family as well as mass applying IPO from family's account (then boast about allotment as 1/5 on whatsapp group). Well, this post is not about those type of account sharing.

It is never a good idea to share brokerage account outside your family.

Answer to the post's title is No.

"No means No" - Amitabh Bachchan

Let's look at the scenarios which could happen (We will call person who handles your account as XYZ from here onwards):

1. XYZ fucks up and lose your money. Wrong trade taken by XYZ will wipe your account, honest mistake.

2. XYZ transfers your money to his/her account via illiquid stock or option. In this scenario, XYZ will choose scrip/option with low volume,

a. buy scrip from your account at higher price.

b. sell from his/her account at that price.

c. sell (close your position) at low price

d. buy same scrip at low price from his/her account.

You have legally lost money to someone.

3. Recently I read about Financial Intelligence Unit-India (FIU-IND) which comes under Department of Revenue. Financial institutions are required to file suspicious transaction reports to the FIU within seven days of a suspicious transaction to prevent money laundering.

So, if XYZ uses your account for money laundering as shown in point 2 and your broker reports your transaction, then you might get in trouble.

Comment or reply to @stocks_in twitter handle if you or your friend have faced such incident too.