The Securities and Exchange Board of India (SEBI) has ordered Avadhut Sathe Trading Academy Pvt Ltd (ASTAPL) and its founder Avadhut Sathe to refund Rs 546.17 crore collected from participants for providing unregistered investment advisory and research analyst services, along with interest of Rs 67.87 crore — yaani, a refund of about Rs 5.46 billion plus interest. The final order was issued on Friday, PTI reported.
Source: The Hindu BusinessLine (PTI)
In its 171-page final order, SEBI imposed a total penalty of Rs 11.5 crore — Rs 6 crore on the academy, Rs 4 crore on Avadhut Sathe and Rs 1.5 crore on Gouri Avadhut Sathe. The regulator barred the academy and Sathe from accessing the securities market for two years or until they comply with the refund direction, whichever is later, while Gouri Avadhut Sathe has been barred for six months, IANS reported.
Source: IANS
What SEBI found
The regulator found that the academy and Sathe provided investment advice and research recommendations through paid programmes, sessions and WhatsApp groups without obtaining the required registration. It also found misleading promotional representations about returns were used to attract participants, and that advice was given without assessing whether the recommendations suited the recipients.
According to the order, the academy and Sathe had collected around Rs 601.38 crore from course participants since inception, of which fees of Rs 546.17 crore attributable to the relevant programmes were identified for disgorgement and refund.
How the refund will work
SEBI directed the academy and Sathe to deposit the refund amount in a dedicated bank account within five months of receiving the order and to publish notices in English, Hindi and a widely circulated local-language newspaper within 30 days explaining how participants can claim refunds. Repayments are to be made only through electronic fund transfers or other banking channels with an audit trail, and any balance remaining after refunds must be handed to SEBI, held in escrow for one year, and then transferred to the Investor Protection and Education Fund (IPEF) if unclaimed.
The Rs 67.87 crore interest amount is to be deposited with SEBI's Investor Protection and Education Fund, Livemint reported. The penalty of Rs 11.5 crore must be paid within 45 days, and the order said the bank accounts of the noticees shall be frozen for debits until the full amount is deposited.
The order is one of SEBI's largest actions against an unregistered trading-education operator and underlines the regulator's position that paid stock-specific advice, live trading calls and research recommendations cannot be offered as 'education' without registration.