Picture this: Your new client is beaming. He’s a fintech rockstar, a guru with a massive online following. He tells you his secret sauce: paid courses where he does “live trading sessions”, sharing his screen as he buys and sells in real time.
“It’s the best way to learn!” he says.
For any sharp CA or lawyer, this is a five-alarm fire. Why? Because of a single name: Avadhut Sathe.
Knowing his story, you can calmly explain that what your client calls “hands-on learning” is what the regulator calls unregistered investment advisory. And that mistake has a price tag running into hundreds of crores.
The Day the Rules of the Game Changed
This isn’t just a scary story — it’s a real-life regulatory earthquake.
The Securities and Exchange Board of India (SEBI) brought the hammer down on Avadhut Sathe and his popular trading academy.
The allegation was simple but explosive:
They were running a massive, illegal advisory business disguised as an educational platform.
The numbers are jaw-dropping.
SEBI didn’t just impose a fine. It barred him from the securities market and ordered him to disgorge ₹546 crore in alleged “unlawful gains”.
This amount represented money collected from over 3.3 lakh investors who paid for courses believing they were receiving education, but were allegedly being sold specific trading tips instead.
In its order, SEBI was crystal clear, stating that the noticees were:
“providing investment advisory and research analyst services under the guise of their stock market training programs to a large number of investors.”
The Golden Rule: Don’t Tell People What to Buy
So what’s the real compliance line that decides whether you sleep peacefully or get a SEBI notice?
It’s simple.
You can teach people how to fish.
You cannot sell them the fish, tell them where to catch it, and what bait to use.
This principle is embedded in the SEBI (Investment Advisers) Regulations, 2013, which mandate registration for anyone providing investment advice for a fee.
Here’s how SEBI sees it:
Safe Zone (Education)
You are:
- Teaching market concepts
- Explaining how instruments work
- Using past examples for learning
- Discussing theory and frameworks
Think of it like teaching someone the rules of chess.
Danger Zone (Advisory)
You are:
- Charging money
- Giving specific, actionable advice
- Saying things like:
“Buy this stock at X price, sell at Y.”
That’s not education. That’s investment advice — and for that, you need a SEBI registration.
SEBI concluded that Sathe’s live trading sessions, complete with entry and exit points, were a clear case of paid advisory. The “education” label was merely window dressing.
How to Not Get Burned: 5-Point Survival Guide for Gurus, Influencers, CAs & Lawyers
This case is a massive wake-up call. Here’s what it means — in plain English.
For the Gurus & Influencers
1. Your Fancy Title Won’t Save You
You can call yourself an “educator”, an “academy”, or a “market wizard”.
SEBI doesn’t care.
If you function like an advisor, you’ll be treated like one.
2. Live Trading Is Playing With Fire
The moment you start calling out trades in a live market, you step onto extremely thin ice.
From a regulator’s perspective, it’s the clearest indicator that you’ve crossed the line from education to advisory.
3. Don’t Fake Your Wins
SEBI accused Sathe’s academy of showcasing only winning trades and selective student testimonials to lure new customers.
This was flagged as a violation of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.
According to SEBI, the entities were:
“engaging in misrepresentation through testimonials and social media content.”
Cherry-picked success stories can be just as dangerous as bad advice.
For the CAs & Lawyers
4. Be the Adult in the Room
Your job is to help clients build clean, defensible businesses.
Guide them to:
- Clearly separate income streams
- Distinguish recorded educational courses from live trading rooms
- Understand that compliance failures can destroy everything they build
Money from a pre-recorded course is very different from money earned by running a live trading room.
5. Warn Them About the Tax Nightmare
This is the most brutal part.
That ₹546 crore SEBI ordered to be disgorged?
It is generally not tax-deductible.
Which means:
- The client pays tax on the income when earned
- Then pays back the entire amount later
A devastating one-two punch that can wipe out an otherwise successful business.
Final Word
The Avadhut Sathe case isn’t just news.
It’s a lesson written in big, bold, extremely expensive letters.
For anyone operating in the fintech, trading education, or influencer economy, ignoring this precedent isn’t just risky — it’s a gamble you simply cannot afford to lose.