MUMBAI: In partial relief to the self-styled trade advisor Avadhut Sathe and his trading academy, the Securities Appellate Tribunal (SAT) has asked them to deposit Rs 100-crore with the Sebi, partially modifying the December 4 order which had impounded Rs 546 crore from them and imposed curbs on trading along with freezing his bank and demat accounts.
The tribunal had concluded the hearing on the matter on Monday but had reserved its opinion, which was posted on its website Thursday. During the hearing Sathe and the academy had denied the Sebi allegations of giving trading tips to students and questioned the impounding order of Rs 546 crore.
The order stated that Sebi’s restrictions on his market access, as well as the freeze on his bank and demat accounts, would be lifted once he complied with the SAT's direction to make a fixed deposit of Rs 100 crore with a lien in favour of the Securities and Exchange Board of India.
The presiding officer Justice PS Dinesh Kumar further said, “appeal allowed in part; it’s ordered that Sebi’s restrictions on him accessing markets and bank accounts shall cease to apply upon the appellants depositing a sum of Rs 100 crore with an escrow account with a lien to Sebi.”
The tribunal also directed him to file a compliance affidavit in this regard. If complied with, these directions will remove restrictions on operating in the market, selling securities, investments made in mutual funds, and debit restrictions on bank accounts.
On December 4, Sebi had ordered Sathe and Avadhut Sathe Trading Academy, to deposit a sum of Rs 546 crore, deemed to be illegal gains earned from providing unregistered investment advisory services. Sebi had also barred them from the market until further orders and restricted debit transactions in bank and demat accounts.
The interim Sebi order issued by whole-time member Kamlesh Chandra Varshney, had accused Sathe and his academy of giving stock tips to students without registering with the regulator as a research analyst or investment adviser.
The regulator had also alleged that Sathe’s academy was luring students with misleading advertisements on earnings from trading after learning from his academy.
During the hearing Sebi pointed out that when nine of 10 retail traders are losing money in the derivatives market, giving trading tips to students without understanding their financial position could not be justified.
Sathe’s side strongly denied these allegations and also questioned the impounding order of Rs 546 crore. His counsel said there was no such fund left or kept in bank accounts, as the amount had been spent on establishing and running the academy, paying taxes and levies to government, and on welfare activities such as corporate social responsibility.
Sathe’s side also denied allegations of giving stock tips and said Sebi relied on selective WhatsApp chats to build its case without understanding the context of the said chats. They also disputed Sebi’s claims regarding wrong testimonials and said students were indeed making profits.