India's market regulator has ordered options trader Avadhut Sathe and his trading academy to refund 5.46 billion rupees ($57.5 million) to course participants. The Securities and Exchange Board of India found that the academy provided unregistered investment advice and research services under the guise of stock market education.
In its final order, the Securities and Exchange Board of India also barred Sathe and Avadhut Sathe Trading Academy Pvt. from accessing the securities market for at least two years and directed them to pay 678.7 million rupees in interest. The 171-page order follows an interim action in December, when SEBI sought to impound alleged unlawful gains and restrictions on market activities. The regulator found that the academy and its founder provided security-specific recommendations, targets, stop-loss levels and trading calls during live market sessions and through WhatsApp groups.
Sathe and his academy did not immediately respond to emails and text messages seeking comment outside regular business hours. They can appeal the order. The academy had previously denied the charges made in the interim order. SEBI said the trading recommendations amounted to investment advice and research services that required registration, which neither the academy nor its directors held, though they denied that their courses amounted to investment advice or research.
The regulator also imposed penalties of 115 million rupees on the academy, Sathe and his wife, Gouri, a director of the company. She was separately barred from the securities market for six months, according to the Oct. 23 order. SEBI said it will treat the course fees as consideration received for the unregistered activities and unlawful gains liable to disgorgement. "Describing the payment as a course fee does not make the advisory or research services gratuitous," the order said.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing