In a landmark crackdown on unregistered financial advice, the Securities and Exchange Board of India (Sebi) has ordered the impounding of a massive Rs 546.2 crore from Avadhut Sathe Trading Academy and its founder, Avadhut Sathe. The market regulator issued the directive on Thursday, marking one of its most significant actions against a stock market influencer.
The Core Violations and Sebi's Directives
Sebi's comprehensive 125-page order mandates the entities to immediately cease all "unregistered investment advisory and research analyst services." Both have been barred from accessing the securities markets until further notice. The regulator found that they had collected a staggering over Rs 601 crore from approximately 3.4 lakh investors.
The investigation revealed that these services were cleverly disguised as stock market education. During training sessions, the academy used live market trading data to provide what was essentially investment advice, all without holding the mandatory registration certificate from Sebi. The regulator clarified that while genuine educational activities are permissible, they must strictly comply with securities laws.
Misleading Claims and Unrealistic Promises
Sebi's probe, which focused on the entities' activities during fiscal year 2023-24, uncovered a pattern of deception. The academy and Sathe were found to be publishing selective, profitable trades of a few course participants. They used these to claim that their trainers were experts and that participants consistently earned high returns from trading.
However, Sebi's forensic analysis of the actual trade data told a different story. It showed that the trainers, course participants, and investors associated with the scheme were, in fact, in net losses. Despite a warning issued by Sebi in March 2024 against such misrepresentation and selective disclosures, the entities continued to publish misleading videos on social media.
Investor Complaints and the Path Forward
The regulatory action was partly triggered by complaints from individuals who had subscribed to various programs offered by Avadhut Sathe Trading Academy. The complainants alleged that despite promises of extraordinary returns, many participants ended up suffering substantial financial losses. Sebi examined recorded sessions and documents provided by these investors as part of its investigation.
Sebi's order explicitly noted that the entities disseminated "misleading information and advertisements through social media, aimed at inducing investors by portraying unrealistic returns from stock market activities." This case underscores the regulator's intensified vigil against unregistered finfluencers and advisory services that prey on retail investors' aspirations. The impounding of funds aims to prevent any further diversion of investor money while the legal process unfolds.
