The securities appellate tribunal (SAT) has delivered a significant verdict in the high-profile case involving stock market educator Avadhut Sathe and his trading academy, granting partial relief while upholding key regulatory concerns raised by the Securities and Exchange Board of India (SEBI).
In an order pronounced on 22 January 2026, the tribunal's bench led by justice PS Dinesh Kumar modified SEBI's stringent December 2025 directions that had effectively frozen the operations of the Avadhut Sathe Trading Academy. The tribunal directed Mr Sathe and his academy to deposit ₹100 crore in a fixed deposit with a lien marked in favor of SEBI, significantly reducing the original impounding demand of ₹546 crore.
The presiding officer stated that upon compliance with this modified direction, restrictions on operating in the market, selling securities, dealing with mutual fund investments and debit freezes on bank accounts would be lifted. The appellants have been instructed to file a compliance affidavit demonstrating adherence to these conditions.
Background of the Regulatory Action
The case originated from SEBI's comprehensive investigation into the operations of Avadhut Sathe Trading Academy which the regulator alleged was conducting unregistered investment advisory and research analyst services under the guise of educational programmes. According to SEBI's interim order dated dated 4 December 2025, the Academy had collected approximately ₹601 crore from more than 337,000 investors since its establishment.
SEBI's investigation which included search and seizure operations conducted on 20th and 21st August 2025, at the ASTA Gurukul campus and the residences of Avadhut Sathe and his wife Gouri Sathe, revealed what the regulator considered systematic violations of securities regulations. The searches resulted in the seizure of mobile phones, laptops, hard disks, computer processing units and access to email and cloud accounts.
The market watchdog's December order had imposed severe restrictions including a complete bar from the securities market, freezing of bank and demat accounts and an order to impound ₹546 crore deemed as illegal gains from unregistered investment advisory services. These restrictions effectively brought the Academy's operations to a standstill.
SEBI's Case against the Academy
During extensive hearings before the tribunal, senior advocate Chetan Kapadia, representing SEBI, presented a detailed case built on four main pillars of alleged violations. The regulator's case centered on testimonials from investors, video recordings of trading sessions, WhatsApp group communications and analysis of trading patterns among course participants.
SEBI highlighted specific instances of what it characterised as misleading testimonials. The regulator pointed to cases where students claimed extraordinary trading profits that could not be verified through stock exchange records. In one notable example, a homemaker claimed to have achieved a ₹1 crore milestone trading in Bank Nifty Options within two and a half years, while actual profit and loss statements showed earnings of only ₹4.17 lakh. Another testimonial featured a former banker claiming consistent earnings exceeding her previous salary, when exchange records indicated losses of ₹1.38 lakh.
The regulator presented video evidence of live trading sessions where mr Sathe allegedly provided specific stock recommendations using real-time market data. In a session recorded on 28 April 2025, involving Power Finance Corporation stock, Mr Sathe was shown discussing entry points, stop-loss levels and potential targets while the market was active. SEBI argued this constituted regulated investment advisory activity requiring proper registration.
SEBI also emphasised the existence of paid WhatsApp groups where participants paying ₹30,000 received regular stock recommendations, including specific directional forecasts, stop-loss levels, and target prices. The regulator's analysis of trading patterns revealed that in 33 out of 34 examined instances, participants traded in alignment with recommendations allegedly provided by Mr Sathe.
Advocate Kapadia stressed that SEBI had issued an administrative warning to the academy on 1 March 2024, advising caution regarding promotional content. However, testimonial videos continued to be uploaded to YouTube even after this warning, including uploads in February, July, and multiple other instances throughout 2025.
The senior advocate also highlighted broader market concerns, citing SEBI's September 2024 data showing that nine out of 10 individual traders incur losses in derivatives trading. Over the three-year period from financial year 2022 to 2024, cumulative losses of individual traders exceeded ₹1.8 lakh crore, underscoring the high-risk nature of such activities.
The Academy's Defence
Senior advocate Janak Dwarkadas, representing the appellants, mounted a vigorous defence challenging the substance and procedure of SEBI's actions. He argued that the regulatory action constituted a flagrant violation of constitutional rights under Articles 14, 19(1)(g), and 21 of the Indian Constitution.
Advocate Dwarkadas contended that Mr Sathe had established the academy in 2008 as a legitimate training platform to impart financial knowledge about investment and trading. The Academy had organised various courses including: Eye Opener Seminars, Get Edge Over Others Program, Pay Attention to Price Action, Futures and Options Made Easy, Get Ultimate Edge, and Advanced Mentorship Programs. In 2025, the Academy had invested in establishing ASTA Gurukul, a residential training campus for advanced courses.
The defence strongly questioned the practical impossibility of complying with SEBI's original directions. Advocate Dwarkadas pointed out the contradictory nature of freezing all bank accounts and market access while simultaneously demanding a deposit of ₹546 crore. He stated emphatically that no such funds were available, as the money collected had been deployed in establishing and running the Academy, paying substantial taxes to the government and conducting corporate social responsibility activities.
According to financial statements presented to the tribunal, the Academy had paid goods and services tax (GST) and service tax totaling ₹90.55 crore, income-tax of ₹71.71 crore and made CSR (corporate social responsibility) donations of ₹3.93 crore. Administrative and operational expenses accounted for ₹316.74 crore, while investments in fixed assets amounted to ₹100 crore. At the time of the account freeze, only approximately ₹4 crore remained in the Academy's bank accounts.
Regarding the use of live market data in training sessions, advocate Dwarkadas drew an analogy to medical education, arguing that theoretical knowledge alone cannot substitute live demonstration and hands-on experience. Just as surgeons require practical training on actual patients, traders need exposure to real market conditions to develop practical skills.
The defence also highlighted what it termed a regulatory vacuum created by contradictory SEBI circulars. A 2024 circular permitted sharing market price data for educational purposes with a one-day lag, while a January 2025 circular prohibited use of market price data from the preceding three months for educational purposes. Advocate Dwarkadas noted that SEBI chairman Tuhin Kanta Pandey had publicly acknowledged this regulatory gap.
Crucially, the defence argued that SEBI failed to identify any instances of personalised, client-specific investment advice. The material relied upon by the regulator consisted of batch-based educational interactions and illustrative discussions which fall outside the definition of investment advice requiring registration. The defence maintained that even the instances cited by SEBI, spread over several years, did not constitute carrying on the business of investment advisory or research services.
Advocate Dwarkadas emphasised that the Academy's website clearly disclosed that it was a financial market training institute not engaged in providing investment advice. He presented chartered accountant-certified statements showing that certain participants had indeed made profits, contrary to SEBI's allegations of widespread losses.
The defence further contended that SEBI's case was built on selective WhatsApp chats taken out of context and did not reflect the true nature of educational communications. The order was characterised as passing sentence without a trial, an ex parte action taken without granting any opportunity to be heard, despite the alleged activities having continued since 2020.
The Tribunal's Reasoning and Decision
After carefully considering extensive arguments from both sides over multiple hearing dates in January 2026, the tribunal delivered a nuanced judgement that acknowledged regulatory concerns and practical realities.
The tribunal made several key findings. First, it held that SEBI had established a prima facie case of violations of the Investment Advisers Regulations of 2013 and Research Analysts Regulations of 2014. These regulations were undisputedly in force during the period under consideration from 2020 to 2025.
The tribunal noted that testimonials had been uploaded to YouTube even after SEBI's administrative warning of 1 March 2024, demonstrating continued promotional activity, despite regulatory concerns. The material seized during search operations, including video recordings and WhatsApp communications, provided factual matrices supporting SEBI's allegations.
Regarding the video clip of the Power Finance Corporation trading session played in court, the tribunal observed that while stock analysis is conducted by many analysts and documented in numerous books, the critical issue was whether an unregistered investment advisor could screen live market data during active trading hours while making recommendations. The tribunal found it reasonable to infer from the admitted use of live data that such material was regularly demonstrated in classes.
However, the tribunal also recognised significant practical difficulties with SEBI's original directions. The total amount collected by the academy was ₹601 crore, but whether these constituted unlawful gains remained to be determined through full adjudication. SEBI had calculated that ₹546 crore needed to be secured based on fees attributed to eight specific programmes.
In balancing these considerations, the tribunal noted that ₹166 crore had already been paid to the government as taxes and the academy possessed fixed assets worth ₹100 crore. This accounted for ₹266 crore, leaving ₹280 crore of the originally demanded amount.
The tribunal concluded that while appellants should not receive complete relief given the prima facie violations established, the ends of justice would be served by requiring a deposit of ₹100 crore while restraining alienation of fixed assets. This approach would secure a significant sum pending final adjudication, while allowing the Academy to potentially resume operations.
Importantly, the tribunal clarified that it was not rendering any findings regarding the tax component of ₹166 crore, leaving this question open for future consideration. All observations in the order were stated to be solely for the purpose of deciding the appeal and would not influence the final order to be passed by SEBI's whole-time member.
Critical Questions Remain Unanswered
A crucial aspect of the tribunal's decision is what was not addressed. The defence team, led by senior advocate Janak Dwarkadas, made a strategic choice to refrain from contesting SEBI's specific factual allegations during the appeal hearing. The tribunal explicitly noted this deliberate silence, stating that "appellants have consciously chosen not to address any arguments with regard to the facts of the case" and that advocate Dwarkadas "categorically submitted that appellants do not invite any findings by this Tribunal by making arguments with reference to the facts of the case." This means that SEBI's detailed allegations regarding misleading testimonials, live trading recommendations and WhatsApp stock tips remain uncontested at this stage.
While the defence asserted they possess "appropriate replies to each and every allegation" and mentioned having chartered accountant-certified statements to support their position, these explanations have not yet been presented. The tribunal acknowledged this gap, noting it had "refrained from recording any findings on the facts" given the appellant's position. This creates a significant information void where serious regulatory concerns backed by specific evidence—including video recordings, trading data, and testimonial discrepancies—stand on the record without a detailed rebuttal. Whether the Academy can successfully explain these allegations when it files its formal response within the four-week deadline remains an open and critical question that will ultimately determine the outcome of this case.
Implications and Next Steps
The tribunal's order represents a significant modification of SEBI's original directions while maintaining regulatory oversight. Upon depositing ₹100 crore, the restrictions on market operations, securities transactions, mutual fund dealings and bank account debits will cease to apply. This will allow the Academy to potentially resume its educational activities, though under continued scrutiny.
The appellants must also file a detailed affidavit before SEBI's whole -time Member disclosing full particulars of their assets with a valuation certificate from a SEBI-certified valuer. They must undertake not to alienate fixed assets without leave of the authority.
The tribunal has given the appellants four weeks to file their response to SEBI's show-cause notice, with all contentions of both parties kept open for final adjudication. The whole-time Member has been directed to pass a final order as expeditiously as possible, completely uninfluenced by the tribunal's interim observations.
This case has attracted widespread attention in India's financial education sector, raising fundamental questions about the boundaries between legitimate market education and regulated investment advisory services. With India witnessing unprecedented retail participation in equity markets and derivatives trading, the regulatory framework governing market education and advisory services has come under intense focus.
The matter highlights the delicate balance regulators must strike between protecting vulnerable investors from potentially harmful advice and allowing legitimate educational activities to flourish. As retail participation in derivatives continues to grow despite high loss rates, cases like this will likely shape how market education is conducted and regulated in the years ahead.
The Academy has expressed optimism about the tribunal's decision, while SEBI will continue to pursue its case through the final adjudication process. The ultimate resolution will provide important precedents for how educational institutions operating in the financial markets space should structure their programmes and communications to remain compliant with securities regulations.
