When an academy charges for stock market trading education, it is expected to provide quality training. However, the situation becomes complicated if instead of education, advice on buying and selling stocks is provided without the necessary registration. This is exactly what happened with the Avadhut Sathe Academy.
The Securities and Exchange Board of India (SEBI) imposed a total fine of 11.5 crore rupees on the academy itself and its directors. Furthermore, it was decided that the Academy and its founder, Avadhut Sathe, must return 546.17 crore rupees to clients who paid for services rendered without proper registration. SEBI also required the payment of interest amounting to 67.87 crore rupees.
Avadhut Sathe and his academy have been banned from engaging in stock market operations. SEBI assigned individual fines: 6 crore rupees to Avadhut Sathe Academy, 4 crore rupees to Trading Guru Avadhut Sathe, and 1.5 crore rupees to Gauri Avadhut Sathe. The total fine amounted to 11.5 crore rupees. Avadhut Sathe and his academy will be barred from operating in the stock market for two years; this restriction may be extended if the refund process takes more than two years. Gauri Sathe was restricted for six months.
According to SEBI data, the Academy did not just provide information about the stock market but also gave specific recommendations on buying and selling certain stocks. These tips were broadcast through live sessions and WhatsApp. Clients were told which asset to buy or sell, what its potential price might be, and at what level to sell the stock in case of losses. Providing such consultations requires SEBI registration.
The regulator noted that the Avadhut Sathe Academy provided such services without the requisite registration. SEBI also questioned the promotional materials and testimonials that featured promises of very high profits from trading. During the investigation, instances of trading losses were identified. Moreover, these statements continued to be circulated despite a warning from the Avadhut Sathe Academy in March 2024.
SEBI required the Academy and Avadhut Sathe to publish a notice regarding the refund within 30 days of receiving the order. This notice must be published in newspapers in English, Hindi, and local languages. It must specify who is entitled to claim a refund and what steps need to be taken to receive the money. Payments will be made through banking channels to track each transaction. The verification process will be monitored by an independent chartered accountant. To collect the required amount, SEBI also placed a ban on the sale of assets belonging to the Academy and Avadhut Sathe, except in necessary cases, and restricted withdrawals from their bank accounts until the required amount is transferred.
In the SEBI order, Gauri Avadhut Sathe's role was examined separately. The regulator found no evidence that she personally advised on investments, planned this activity, or gained illegal profits. Nevertheless, she was fined 1.5 crore rupees and restricted from participating in stock market trading operations for a period of six months. Individuals who paid for the Academy's services can apply for a refund based on the information published in the newspapers.
