In what could be the beginning of a big crackdown on illegal investment advisories running in the name of educational institutes, the market regulator has impounded Rs 53.67 crore earned by a popular stock market training school Asmita Patel Global School of Trading Pvt Ltd and five other entities.
This school runs various popular paid courses such as Let's Make India Trade (LMIT), Master's in Price Action Trading (MPAT) and Options Multiplier (OM). The regulator started the investigation following complaints from 42 participants of several such courses.
SEBI has also asked the entities to show cause why Rs 104.6 crore collected as fees for various programmes should not be seized as well.
In the interim order, the Securities Exchange Board of India (SEBI) has asked the school, Asmita Jitesh Patel and Jitesh Jethalal Patel from stop offering unregistered investment advisory and research analyst services, and has asked all six noticees from accessing the securities market.
The order also asked the noticees to show cause why a series of directions should not be passed against them, including why the regulator should not ask them to disgorge Rs 1,04,62,88,613/- along with interest. The order said, "The aforesaid amount includes not only the amount collected as fees by the Noticees for LMIT, MPAT and Options Multiplier (OM) courses but also includes the fees collected by the Noticees for the other courses offered by the Noticee no.1 (Asmita Patel Global School of Trading )through which it carried out unregistered investment advisory and research analyst services along with interest".
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In the order, SEBI's Whole-time Member Kamlesh Varshney noted, "Examination revealed that, prima facie, the Noticee no. 1 (Asmita Patel Global School of Trading) along with the Noticee no.2 (Asmita Jitesh Patel) and the Noticee no.3 (Jitesh Jethalal Patel) devised a scheme wherein students/investors/participants were lured to trade in specific stocks and told to open trading account with ABC Ltd. Recommendations of buy/sell of specific securities were provided and uploaded on telegram channels owned by the Noticee no.1. The acts of the Noticee no.1 makes it evident that it was providing investment advice/ research analyst services to students/investors/participants for a consideration in the pretext of imparting education."
The order also noted how the money was being routed through King Traders (of which the proprietor is Sagar Dhanjibhai), Gemini Enterprise (Proprietor: Suresh Parmashivam) and United Enterprises (Proprietor: Jigar Rameshbhai Dawada) by asking course participants to pay the fee to the bank accounts of these entities. It also said that this was not a one-time instance but a regular practice and therefore all six entities were jointly and severally liable for impounding of the proceeds to the tune of Rs 53.67 crore, generated from the fees collected from participants of courses, LMIT, MPAT and Options Multiplier (OM) offered by the school.
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