Description

SEBI issues interim ex-parte order against Avadhut Sathe Trading Academy Private Limited and its directors for operating as unregistered investment advisers and making misleading claims about trading profits.

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), Avadhut Dinkar Sathe, and Gouri Avadhut Sathe. The investigation revealed that ASTAPL and its associates were providing stock advice and recommendations to course participants without being registered as investment advisers. They published selective profitable trades while concealing losses, made misleading claims about consistent trading profits, and collected substantial fees for unregistered investment advisory services during FY 2023-24.

Key Points

  • ASTAPL and Avadhut Sathe operated as unregistered investment advisers by providing stock recommendations during training sessions and through WhatsApp groups
  • Published selective profitable trades of course participants while concealing their actual losses to create false impression of trading success
  • Made misleading claims that trainers are stock market experts and participants consistently earn through trading
  • Collected fees from course participants for activities that constituted unregistered investment advisory services
  • Investigation covered analysis of stock advice during sessions, WhatsApp group recommendations, trading patterns, testimonials, and profit/loss statements of participants
  • Order covers three noticees: ASTAPL (PAN: AATCA1675K), Avadhut Dinkar Sathe (PAN: BCSPS7915K), and Gouri Avadhut Sathe (PAN: BIUPS6942Q)

Regulatory Changes

No new regulatory changes. This is an enforcement action under existing provisions of:

  • Section 11(1), 11(4), and 11(4A) of SEBI Act, 1992 (powers to protect investor interests and prevent fraudulent practices)
  • Section 11B(1) and 11B(2) of SEBI Act, 1992 (investigation powers)
  • Section 11D of SEBI Act, 1992 (interim orders)
  • SEBI (Investment Advisers) Regulations, 2013

Compliance Requirements

  • Entities providing investment advice must register with SEBI as investment advisers under the SEBI (Investment Advisers) Regulations, 2013
  • Investment advisers cannot make misleading claims about trading profits or success rates
  • All material information, including losses and risks, must be disclosed to clients
  • Publishing selective profitable trades while concealing losses constitutes fraudulent and unfair trade practice
  • Directors and key personnel of entities engaged in unregistered advisory activities can be held jointly and severally liable

Important Dates

  • Investigation Period: FY 2023-24
  • Order Date: December 2025 (reference number: QJA/KV/MIRSD/MIRSD-SEC-1/31823/2025-26)
  • This is an interim ex-parte order cum show cause notice (specific compliance deadlines would be mentioned in the full 125-page order)

Impact Assessment

Regulatory Impact: This enforcement action reinforces SEBI’s strict stance against unregistered investment advisory activities and fraudulent practices. It sends a clear message to trading academies and similar entities that providing stock-specific recommendations without registration violates securities laws.

Market Impact: Limited direct market impact as this affects specific entities rather than broad market operations. However, it serves as a deterrent for similar unregistered advisory operations.

Investor Protection: High impact on investor protection by addressing misleading claims and unregistered advisory services. The order protects retail investors from being misled by selective disclosure of profitable trades while concealing actual participant losses.

Industry Impact: Trading academies and educational institutions need to clearly distinguish between general trading education and specific investment advice. Providing stock-specific recommendations requires registration as investment adviser.

Impact Justification

High importance due to enforcement action against unregistered investment advisory activities with fraudulent practices. Medium market impact as it affects specific entities rather than broad market operations.