Asmita Patel's trading school pushed people to take loans, use others' money, quit jobs to trade: SEBI

Reckless advice

SEBI's officials found the school's representatives including its director cited instances of professionals quitting their jobs and making extraordinary returns after taking her course or adopting her strategies. For example, there were claims of a VP of a big company whose trading capital went up from Rs 30 lakh to Rs 3 crore, a chartered accountant whose capital went up from Rs 30 lakh to Rs 12 crore and an engineer who quit his job to become a full-time trader and who thus came to have a trading capital of Rs 80 lakh.

As the SEBI order noted, "Students/investors/participants were encouraged to leave job and join MPAT (a course run by her institute) to make something big."

Participants were advised to exit mutual fund investments or use other people's money in case they were short of capital! In a recorded conversation with a course participant, Patel advises borrowing for trading and adds that it should not be for an interest rate of more than 18 percent.

Through various conversations, stock trading was projected as a business where one could continuously make more money. A student was told to expect returns of 35-40 percent, and the risk-reward ratio was projected at 1:3, among other things.

Besides the SEBI findings, Moneycontrol independently found instances of the Asmita Patel Global School of Trading telling children as young as 10 years old they can participate in share market (see below).  According to SEBI norms, a minor can hold a demat account and a trading account, but the former can be operated only by the guardian and the latter can be used only for sale of securities that came into the minor's possession through gift/donation, transfer between family members or implementation of government/regulatory directions or orders.

SEBI's FAQs on demat/trading accounts for minor says, "A minor cannot enter into a contract with a stock broker to purchase or sell any security".

There's also a video in which Patel dismisses the importance of having even a basic understanding of financial markets or financial statements, and says that even an eighth standard pass who can add and subtract can invest in the stock market.

'Wolf' and a pack of lies

Asmita Patel liked to refer to herself in hyperbole, calling herself the "She Wolf of stock market" and “options queen", whose strategies could generate even 300 percent returns. However, the SEBI investigation revealed that over four years (between 2019-2020 and January 2024) the school and Asmita Patel had trading profits of only Rs 12.28 lakh.

She also claimed to have managed portfolios worth Rs 140 crore in her proprietary accounts and funds worth Rs 283 crore. But SEBI investigation revealed that it was an exaggeration by at least a factor of 10. The investigation showed that the total turnover generated by trading accounts held by the school and Asmita Patel in total was a little over Rs 15.27 crore (or close to a tenth of her smaller claim of managing a Rs 140 crore portfolio).

As the SEBI order noted, the claims made by Asmita Patel about managing a huge portfolio "appear to be completely false and made with an intention to attract participants to various courses".

Also read: MC Exclusive| Algo sellers working out illegal arrangements with RAs to get around new SEBI norms

Get-rich schemes

The agreements signed by clients/students when enrolling for the school's training programme/course are oddly phrased.

One of the clauses was that the participant has to agree that under no circumstances, any drawdown in the trading capital during the programme will affect the "mental stability, physical health and social well-being" of the participant.

The disclaimer in the agreement states that the institute does not believe in get-rich programmes and only in hard work, adding value and so on.

But SEBI, after this preliminary examination found that "while in the agreements signed with students/investors/participants, there were disclaimers that it was not a get-rich program and that there is no guarantee of returns, the actual facts are exactly the reverse."