SEBI cracks down on finfluencer Asmita Patel, orders ₹53.67 cr impound for illegal stock advisory

The Securities and Exchange Board of India (SEBI) has initiated proceedings against finfluencer Asmita Patel, her company Asmita Patel Global School of Trading Private Ltd (AGSTPL) and its key figures following complaints from 42 participants. The market regulator also directed the authorities to impound Rs 53.67 crore from the finfluencer and others for allegedly offering illegal investment advisory services via courses, telegram channels, and other mediums without proper registration.

SEBI has also issued a show-cause notice as to why directions should not be issued against it to disgorge Rs 1,04,62,88,613, along with interest, which includes not only the amount collected as fees for the expensive courses offered by her and her company but also the fees collected for the other courses offered by her through which it carried out "unregistered investment advisory and research analyst services".

SEBI says its independent examination into their activities, carried out between August 26, 2019, to October 31, 2023, showed she was engaged in providing stock buy/sell recommendations to investors through private telegram channels, zoom meets and emails, along with providing educational courses, without obtaining the mandatory registration.

The complainants alleged high course fees and fake promises. All 42 of them had enrolled for the educational courses, ‘MPAT 16’ and ‘MPAT 17’ that were conducted during 2021 and 2022, while a few of them also subscribed for the LMIT course, a 3-day course. MPAT was a seven-month course for which Rs 7,00,000 per student was charged, which after including GST of 18% comes to Rs 8,26,000.

The complainants said the MPAT course students were added to a telegram Group, M16/M17, where the accused circulated trade details including entry and exit prices. Through the Zoom meets, they insisted students/investors/participants "liquidate existing mutual fund investments as well as gold and to borrow from various sources such as banks, friends and family, to enable them to subscribe to the course and bring in more capital towards trades that would be suggested on the telegram channel", the regulator found.

The finfluencer was also accused of unauthorised handling of trading accounts via ABC Ltd, where Patel acted as a broker herself and advised the complainants that if they already had accounts, the same should be transferred to her branch.

The students faced consistent losses and alleged misleading guidance by the finfluencer. "Despite implementing the prescribed strategies, students/investors/participants failed to achieve profits and instead made substantial financial losses...the participants having paid a substantial sum for the online course, found themselves incurring significant losses through their stock trading activities,” the SEBI order says.

Complainants said the classes run by Patel were in complete violation of the SEBI Act, including PFUTP Regulations, as she has miserably failed to act honestly and in good faith with due skill, care and diligence. Thus, the complainants urged SEBI to direct the finfluencer to refund money received from them in respect of its unregistered advisory activities and pass an order to reimburse the losses suffered. SEBI found that the total amount subject to disgorgement is ₹1,04,62,88,613 ( over ₹101 crore), along with applicable interest.