Asmita Patel's training institute encouraged irresponsible investing behaviour: SEBI

Markets regulator Securities and Exchange Board of India (SEBI) has banned six entities, including fininfluencer Asmita Patel and her trading school- Asmita Patel Global School from the capital markets for alleged unregistered investment advisory services.

Patel is popularly known as the "she wolf" of the stock market and the "options queen" and leverages her social media presence extensively to run her trading school. She has over 2,90,000 followers on Instagram, 5,26,000 subscribers on YouTube, 73,000 followers on Facebook, among other platforms.

On February 6, SEBI impounded illegal gains of nearly Rs 54 crore and asked the school and other noticees, including its directors, to show cause why all of the fees amounting to approximately Rs 104 crore should not be seized.

Asmita Patel is one of the directors of the popular Asmita Patel Global School of Trading Pvt Ltd.

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

Read more: Finfluencers face 60% decline in brand deal rates, drop in followers as SEBI tightens rules

Triggered by 42 participant complaints, SEBI's investigation found that the school was advising students to trade in specific stocks and open trading accounts with a particular firm. Additionally, stock tips were shared through Telegram groups.

Going by the investigation, participants were also advised to exit mutual fund investments and in certain cases, Patel advised participants to borrow for trading.

The market regulator has directed Patel, her school, and other involved entities to cease offering investment advisory and research analyst services.

Moneycontrol independently found instances of the Asmita Patel Global School of Trading telling children as young as 10 years old they can participate in the share market.

The SEBI norms state that 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.

The SEBI order also noted that the claims made by Patel about managing a huge portfolio appear to be completely false and made with the intention to attract participants to various courses.

Further, in the preliminary examination, SEBI also 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."

SEBI, through an interim order-cum-show-cause notice, has also prohibited four other entities including Jitesh Jethalal Patel (Asmita Patel's spouse), King Traders, Gemini Enterprise and United Enterprises.

Recently, SEBI's prohibitited financial influencers from using trend data to make predictions would lead to a significant drop in brand deals from brokerage firms and investment platforms. The regulator has also prohibited non-registered finfluencers from making claims about returns, with penalties for violations including fines or suspension of registration. Additionally, it pointed out that stock market educators can only use stock prices with a three-month lag, effectively preventing them from offering real-time trading tips disguised as education.