SEBI orders Avadhut Sathe Trading Academy to refund Rs 546 crore, imposes Rs 11.5 crore penalty

In a final order passed on Friday, SEBI has barred the academy and Avadhut Sathe from accessing the securities markets for two years or until they comply with the refund direction, whichever is later. Gouri Avadhut Sathe, a director of the academy, has been barred from the markets for six months. SEBI has imposed a total penalty of Rs 11.5 crore on the academy, Avadhut Sathe and Gouri Sathe. The academy faces a penalty of Rs 6 crore, Avadhut Sathe Rs 4 crore and Gouri Sathe Rs 1.5 crore.

The penalties must be paid within 45 days of receipt of the order. The academy and its founder have been given five months from receipt of the order to deposit the Rs 546.17 crore in a dedicated bank account from which refunds will be made. They must also publish notices in English and Hindi national newspapers and a widely circulated local-language newspaper within 30 days of receiving the order, explaining how eligible investors and participants can claim refunds.

Any balance remaining after the refund process must be deposited with SEBI and kept in an escrow account for one year for distribution to clients, complainants and investors who availed of the advisory or research services. Any amount still left after that period will be transferred to the IPEF. SEBI has also frozen the bank accounts of the academy and its founder for debits until the required amounts are deposited.

They have been prohibited from selling their assets, including shares and mutual fund investments, except to comply with the refund directions. The regulator has directed all three noticees to stop offering unregistered investment advisory and research analyst services. They have also been prohibited from using live or historical data that provides directional indications for the future movement of specific securities.

The order follows an investigation covering the period from July 1, 2017, to October 9, 2025. SEBI alleged that the academy and its founder went beyond providing stock-market education and offered stock-specific advice, trading calls, entry and exit targets, stop-loss levels and price-direction forecasts without the required registrations. SEBI had also raided the academy in Karjat in August last year.

The regulator also said the academy's promotional material selectively showcased profitable trades and made claims about participants earning high returns. It noted that the conduct continued despite an administrative warning issued in March 2024 over misleading representations and selective disclosure of performance. The academy and its founder argued that their programmes were educational, that participants made their own trading decisions and that the fees were charged for courses rather than investment advice.

SEBI rejected these arguments and quantified the amount to be refunded at Rs 546.17 crore. SEBI said the business model of ASTPL undermined regulatory objectives. In his order, SEBI quasi-judicial authority N. Murugan said, “A recommendation can influence an investment decision even when delivered during teaching. Calling its recipient, a student does not reduce the risk of acting upon it”. Murugan further said participants might place greater confidence in recommendations because they came from the person teaching them and validating their understanding.

He said, “demonstrating successful trades or promoting further courses may create incentives to reinforce confidence in a method. This makes the regulatory requirements concerning independence, conflicts of interest and an arm’s-length relationship with other activities particularly relevant. Trust in a mentor cannot substitute for those controls”. The order dealt separately with Gouri Sathe's responsibility.

SEBI said her liability was based on neglect of her oversight duties as a director. It did not find that she had personally provided the disputed services, devised the arrangement or obtained wrongful gains attributable to it.