The action followed complaints from participants of Avadhut Sathe Trading Academy (ASTA) that they had incurred substantial losses despite the academy’s promises of “extraordinary returns”.

In its interim order, Sebi said its investigation found that several claims made in ASTA’s advertisements were misleading.

Sebi noted that the academy was providing investment advice without being registered, in violation of securities laws, and collected around ₹600 crore in course fees from more than 337,000 participants between 2015 and 2025.

ASTA has denied Sebi’s allegations.

This isn’t the first time that claims of helping people earn big profits in the stock markets haven’t turned out to be true.

But why do many intelligent individuals become attracted to such schemes that ultimately harm them financially? Certain psychological elements are at play, but being aware of them can help prevent us from falling into financial trouble.

Desire to learn the ‘secret sauce’

While traditional wisdom suggests that individuals can generate wealth by holding equities for the long term, many people seek shortcuts to achieve this goal. Perhaps there’s a trading strategy or technique that tells the right time to buy or sell an investment, or an exotic investment that they don’t know about, and so on. If only they could learn this secret sauce, people believe they too could become rich, and this is what financial salesmen target.

“They’re selling a dream,” said Tania Ahuja, founder of Sebi-registered investment adviser Nobias Analyst India.

At the ASTA, its flagship course was titled Get Edge Over Others (GEO), which in turn would teach ‘Secrets of Market Millionaires’ (SMM). Its videos on YouTube featured testimonials from participants who had achieved success.

One video uploaded in October 2023 featured homemaker Lakshmi Sreenivasan, who allegedly had made a profit of ₹1 crore by trading options on the Nifty Bank between December 2020 and March 2023. However, Sebi said its analysis of Sreenivasan’s trading accounts from the stock exchanges showed that she had made a profit of only ₹4.17 lakh from the Nifty Bank options trading during the given period.

Another video posted in February talked about how Akash Ratnakar Warpe converted ₹1.8 lakh into ₹45 lakh by using a strategy learnt from the academy. However, Sebi found that he had incurred a loss of nearly ₹6 lakh during the period. These are a few instances of how the academy and Avadhut Sathe had been “circulating videos which falsely advertised that their course participants had earned extraordinary profits”, Sebi said in its order.

This is a cautionary tale for investors, according to advisers.

“If it’s too good to be true, then it’s not true,” said Ahuja. She said that people need to understand that everyone in finance is trying to sell something, so they should dig further to understand their claims. “You just simply can’t believe everything they say,” said Ahuja.

Temptation to succeed big and fast

Building wealth by earning money or by buying and holding stocks can take years. The urge to make money or achieve success quickly can sometimes drive us into programmes that may not always be ideal.

“People who are in extreme hurry in life…jump into something without asking even some fundamental questions,” said Vivek Rege, founder of Sebi-registered investment adviser V R Wealth Advisors in Mumbai.

Consider the case of a 45-year-old entrepreneur who signed up for ASTA’s flagship GEO online course during the covid-19 pandemic in 2021.

Although the four-month GEO course was expensive, at ₹72,000, the entrepreneur, who spoke on the condition of anonymity, felt it was worth it because it taught them the fundamentals of trading. After that, they signed up for the academy’s in-person mentorship programme, which costs around ₹7 lakh, plus the cost of travel and lodging to attend an offsite, which was part of the programme.

Though they found the price tag steep, the entrepreneur thought at the time: “If I do this course, then I don’t need to do anything else, and I’ll become a market expert.”

However, the course did not live up to their expectations. They said they were taught some trading setups that can be learnt for free on YouTube. “It was not worth the price, which we were paying.”

For others who might be tempted by the idea of making big money quickly, this entrepreneur cautioned that they should not think that by attending a 3-4-month course, they will earn crores. “That is all an illusion. It will take a lot of time and patience.”

Tendency to go with the crowd

Individuals tend to feel more comfortable when they see others around them doing the same. When we’re trying to make a decision related to our money, we tend to be influenced positively when others are doing the same.

The entrepreneur who signed up for the academy’s GEO course said they had relied on references from friends who had taken the course when deciding which course to study.

ASTA’s videos often showed training sessions or convocations with tens of people in the room and online.

“There is crowd comfort,” said Rege, adding, “If you see more and more people going there, you’ll also go there.” For instance, he said this is why we look on social media to see which posts are being read the most, or how many people are liking or commenting on a post. All of that influences us.

Confirmation bias

This is yet another common behavioural finance trait, wherein once we believe something, we look only for information that supports that belief. In this state of mind, people stop asking critical questions.

“They want to hear what they want to hear,” said Rege. If someone questions their belief, they are not open to listening to it, he said.

This can land us in trouble, according to financial advisers.

Rather, when it comes to anything involving an investment of money, we should be asking tough questions.

To begin with, ask about the qualifications of the financial professional offering to help you make high returns. “Check the person’s credentials, is he qualified?” said Ahuja.

In the case of Avadhut Sathe, Sebi’s order stated that Sathe and the academy were not registered with the regulator in any capacity, including as an investment adviser, research analyst, or otherwise. This made it illegal for the firm to offer or its trainers to give stock trading advice.

Secondly, keep in mind that the information or reviews we read online or on social media may be selective, designed to reinforce our beliefs.

An early examination by the regulator revealed that ASTA “was publishing selective profitable trades of course participants/investors and claiming that his course participants/investors consistently earn through trading and that the trainers at ASTAPL/AS are experts in the stock market”.

However, Sebi’s analysis showed “that all such trainers and course participants/investors were in net losses”, it said in its order.

Investors should be mindful that people don’t really publish social-media stories about what went wrong, or instances when losses were made, said Rege.

“There will be millions of stories which will not come out,” he said.