SEBI has imposed separate penalties on three individuals and the company. Avadhut Sathe Trading Academy has been fined ₹6 crore, trading trainer Avadhut Sathe ₹4 crore, and Gauri Avadhut Sathe ₹1.5 crore, taking the total penalty to ₹11.5 crore.
Avadhut Sathe and his academy will be prohibited from trading in the stock market for two years. If the refund process takes longer than two years to complete, the restriction may continue beyond that period. Gauri Sathe has been barred from trading for six months.
According to SEBI, the academy was not merely providing stock market education but was also recommending specific shares for buying and selling. These recommendations were allegedly delivered through live sessions and WhatsApp messages. Participants were told which shares to buy or sell, the price levels they could reach, and the levels at which shares should be sold to limit losses.
SEBI stated that registration with the regulator is required to provide such investment advice. However, the academy was allegedly offering these services without the necessary registration.
The regulator also questioned advertisements and testimonials published by the academy that featured claims of earning substantial profits through trading. Its investigation also found instances of losses during trading. According to SEBI, such claims continued even after the regulator issued a warning to Avadhut Sathe Trading Academy in March 2024.
The case highlights the distinction between providing stock market education and offering investment recommendations, which require the appropriate regulatory registration. SEBI's action addresses the academy's alleged provision of unregistered services and the recovery of fees paid by those who used them.
SEBI has directed the academy and Avadhut Sathe to issue a refund notice within 30 days of receiving the order. The notice must be published in one English, one Hindi and one local-language newspaper. It must explain who is eligible to claim a refund and the procedure for recovering the money.
Refund payments must be made through banks to ensure that every transaction is recorded. An independent chartered accountant will examine the entire refund process.
SEBI has also restricted the sale of assets belonging to the academy and Avadhut Sathe, except where necessary to arrange the funds required for refunds. Withdrawals from their bank accounts will remain prohibited until the required amount has been transferred.
The penalties, trading restrictions and refund directions form part of SEBI's action against the academy's alleged unregistered activities, with the refund process intended to return money to those who paid for its services.
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