Description

SEBI issues ex-parte interim order cum show cause notice against Avadhut Sathe Trading Academy Private Limited and its directors for violations of SEBI Act and regulations related to unregistered investment advisory activities.

Summary

SEBI has issued an ex-parte interim order cum show cause notice under Sections 11(1), 11(4), 11(4A), 11B(1), 11B(2), and 11D of the SEBI Act, 1992 against Avadhut Sathe Trading Academy Private Limited (ASTAPL) and its directors - Avadhut Dinkar Sathe and Gouri Avadhut Sathe. The order pertains to violations related to conducting unregistered investment advisory activities during FY 2023-24.

Key Points

  • SEBI examination revealed ASTAPL/Avadhut Sathe was publishing selective profitable trades of course participants while claiming consistent earnings
  • The entity was providing stock advice and recommendations during training sessions and through WhatsApp groups
  • ASTAPL and its directors operated without registration as Investment Advisers under SEBI (Investment Advisers) Regulations, 2013
  • Investigation covers three noticees: Avadhut Sathe Trading Academy Private Limited (PAN: AATCA1675K), Avadhut Dinkar Sathe (PAN: BCSPS7915K), and Gouri Avadhut Sathe (PAN: BIUPS6942Q)
  • The order includes analysis of stock recommendations, trading patterns of participants, fees collected, and profit/loss outcomes

Regulatory Changes

This order reinforces SEBI’s stance on unregistered investment advisory activities and may lead to:

  • Stricter scrutiny of trading education programs that provide specific stock recommendations
  • Clearer demarcation between educational content and investment advice
  • Enhanced enforcement against entities conducting unregistered advisory activities

Compliance Requirements

  • Entities providing investment advice or stock recommendations must register as Investment Advisers under SEBI (Investment Advisers) Regulations, 2013
  • Trading academies must ensure their educational activities do not cross into providing investment advice without proper registration
  • Directors and key personnel may be held jointly and severally liable for regulatory violations
  • The noticees are required to respond to the show cause notice

Important Dates

  • Order reference: QJA/KV/MIRSD/MIRSD-SEC-1/31823/2025-26
  • Order date: December 04, 2025
  • Investigation period: FY 2023-24
  • Response deadline: As specified in the show cause notice (not mentioned in the excerpt)

Impact Assessment

Market Impact: Medium - This action serves as a warning to unregistered investment advisory services operating under the guise of trading education programs.

Regulatory Impact: High - Demonstrates SEBI’s active enforcement against unregistered advisory activities and protection of retail investors.

Investor Protection: High - The order aims to protect investors from potentially misleading claims and unregulated advice.

Industry Impact: Medium to High - Trading academies and educational platforms need to carefully review their services to ensure compliance with SEBI regulations and avoid crossing the line into investment advisory activities requiring registration.

Impact Justification

High severity enforcement action by SEBI against unregistered investment advisory activities, with potential implications for investors and the broader regulatory framework for trading education services.