In a major crackdown on unregistered investment advisory services, the Securities and Exchange Board of India (SEBI) has issued an interim order against Asmita Patel Global School of Trading Pvt Ltd (APGSTPL), its director Asmita Patel, her husband Jitesh Jethalal Patel and associated entities, impounding a sum of Rs53.67 crore. SEBI has accused financial influencer (finfluencer) Ms Patel, who has been featured in several media like Economic Times (ET), Moneycontrol and BusinessLine, and her associates of running an illegal investment advisory business under the guise of an educational institution.
In a hard-hitting order, Kamlesh C Varshney, whole-time member (WTM) of SEBI, says, "Examination revealed that, prima facie, APGSTPL along with Ms Patel and her husband Jitesh devised a scheme where students, investors and participants were lured to trade in specific stocks and told to open trading account with ABC Ltd. Recommendations of buy and sell of specific securities were provided and uploaded on telegram channels owned by the company The acts of APGSTPL makes it evident that it was providing investment advice and research analyst services to students, investors and participants for a consideration in the pretext of imparting education."
"As seen further, the company also collected fees from course participants through King Traders (proprietor - Sagar Dhanjibhai), Gemini Enterprise (proprietor - Suresh Parmashivam) and United Enterprises (proprietor- Jigar Rameshbhai Dawada) by giving specific instructions to course participants to pay the course fees to their bank accounts. This arrangement of the APGSTPL to route through funds through King Traders, Gemini Enterprise and United Enterprises was not a one-time instance but a regular practice being followed. Considering the material on record, I note that all noticees are jointly and severally liable for impounding of the proceeds to the tune of Rs53.67 crore generated from the amounts collected by noticees as fees from course participants for courses, let's make India trade (LMIT), master's in price action trading (MPAT) and options multiplier (OM) offered by the APGSTPL," the WTM says.
The investigation revealed that Ms Patel, a well-known financial influencer, leveraged her social media presence to promote investment courses while allegedly providing unregistered investment advisory services. SEBI found that Ms Patel and her company provided stock recommendations and investment strategies to clients without the necessary SEBI registration, violating provisions of the SEBI Act, 1992, the Investment Advisers (IA) Regulations, and the Research Analysts (RA) Regulations.
During the examination period, in her capacity as the authorised person of stockbroker ABC Ltd, Ms Patel operated nine terminals. She has a significant presence in electronic media through her asmitapatel.com and on social media platforms such as YouTube (526,000 subscribers), Instagram (290,000 followers), Facebook (73,000 followers), LinkedIn (1,900 followers), X (erstwhile Twitter) (4,200 followers).
The market regulator's swift action comes after complaints from 42 individuals who alleged that Ms Patel and her firm misled them into believing they would achieve financial freedom through her courses. SEBI emphasised that Ms Patel's continued advisory activities posed a significant risk to investor confidence and the integrity of the securities market.
The complainants claimed that Ms Patel referred to herself as the 'she-wolf of the stock market' and the 'options queen' and claimed to have mentored over one lakh students, investors and participants worldwide. As per the complainants, she claimed to manage assets of Rs140 crore using her proprietary system.
The complainants told SEBI that Ms Patel and her team furnished students, investors and participants with detailed stock recommendations, including buy and sell prices as well as stop loss points with an objective to adhere to precise guidelines for entry pricing, stop loss levels and exit rules. These recommendations were disseminated through emails and a dedicated Telegram group. Ms Patel urged complainants to trade in specific stocks, creating an impression that the trading strategies would increase their financial liquidity and generate exceptional profits. The complainants claimed that they were told to invest in certain stocks so that they would be millionaires as soon as she got insider information for the complainants, which was pivotal to accessing the market. Ms Patel allegedly used to say that at the end of the year, everyone would make a profit, and no one would suffer losses if they traded through her.
The complainants claimed that, despite implementing the prescribed strategies, students, investors and participants failed to achieve profits and instead made substantial financial losses. Further, they submitted that course participants were not taught any substantial trading skills to trade on their own and were charged exorbitantly for the basic knowledge provided during the course, which otherwise was available for free on the internet.
According to SEBI's findings, Ms Patel and her firm collected substantial fees from investors for courses such as MPAT and OM. However, the courses allegedly served as a front to solicit investments and provide advisory services without regulatory approval. The investigation uncovered a network of proprietary firms, including King Traders, Gemini Enterprise, and United Enterprises, which were used to channel funds from participants.
SEBI has directed Ms Patel, her company and associated entities to immediately cease all investment advisory and research analyst activities. Furthermore, they have been restrained from buying, selling, or dealing in securities until further orders. To prevent the siphoning of funds, SEBI has also ordered banks and depositories to freeze accounts linked to Ms Patel and her company, ensuring that the impounded funds remain within regulatory reach.
While Ms Patel has reportedly filed a settlement application with SEBI, the regulator has clarified that such a filing does not preclude it from taking necessary measures to protect investors. SEBI has also instructed Ms Patel and her firm to provide a full inventory of their assets, including bank accounts, demat holdings, and properties.
