Avadhut Sathe case: SEBI sought Rs 546 crore but SAT ordered to deposit Rs 100 crore. How SAT arrived at the Rs 100 crore figure?

Avadhut Sathe case: SEBI sought Rs 546 crore but SAT ordered for deposit of Rs 100 crore. How SAT arrived at Rs 100 crore?  

In its order giving partial relief to Avaddhut Sathe and his Avadhut Sathe Trading Academy (ASTA) the Securities Appellate Tribunal (SAT) has detailed the reasoning behind its direction to Avadhut Sathe and his trading academy to deposit Rs 100 crore, while granting partial relief from SEBI’s order to impound Rs 546 crore in an alleged illegal investment advisory case.

SAT said SEBI had made out a prima facie case of violation of the Investment Adviser (IA) and Research Analyst (RA) regulations, which ruled out any blanket relief to the appellants at this stage. However, the tribunal held that the quantum of money to be secured pending adjudication required a calibrated approach.

According to SEBI, Sathe and his academy had collected Rs 601 crore from investors. While the question of whether this amount constitutes unlawful gain is yet to be decided, SEBI assessed that Rs 546 crore needed to be secured to safeguard investor interests.

SAT noted that a significant portion of this amount was already accounted for. Of the Rs 546 crore, Rs 166 crore is lying with the Government treasury towards tax payments. In addition, the appellants own fixed assets valued at around Rs 100 crore.

This meant that Rs 266 crore was already traceable, the tribunal observed. After deducting this amount from the Rs 546 crore sought by SEBI, the remaining unsecured sum came to Rs 280 crore.

Sathe’s counsel, urged SAT to set aside SEBI’s order and allow them to file their reply before any coercive steps were taken. The tribunal rejected the plea, holding that once a prima facie case had been established, such relief could not be granted.

Also read: SAT directs trading guru Avadhut Sathe to deposit Rs 100 crore in case against SEBI

SAT considered the fact that IA Regulations and the RA Regulations were in force during the period of 2020 to 2025.  Testimonials were uploaded on the YouTube channel even after administrative warning issued by the SEBI in March 2024. SAT observed that SEBI has placed on record the factual matrices of the case and the material seized during the search and seizure operation which also include the testimonials. Thus, SEBI has made out a prima facie case of violation of IA and RA Regulations.

At the same time, SAT said the purpose of the interim order could be served without insisting on the entire Rs 280 crore being deposited immediately. SAT said, “In our view, ends of justice would be met by directing the appellants to deposit a sum of Rs 100 Crores in the bank and restraining them from alienating the fixed assets”.

SAT clarified that the directions were interim in nature and would not prejudice the final outcome of SEBI’s proceedings, where the legality of the collections and any eventual liability will be decided.

Also read: SEBI panel rejects proposal on blanket exemption in case of family arrangements under Takeover Code.