Sebi's battle to protect investors brings educators in firing line

With demat accounts exceeding 200 mn in Aug, Sebi aims to encourage genuine investor education

- Neha Joshi

The crackdown on investor trainer Avadhut Sathe is a signal to others who may be offering unauthorized financial advice in the name of market education as the regulator seeks to draw a distinction, according to experts.

"The clearest line yet between education and advice is that educators can explain concepts and rely on data older than three months, while any reference to a live stock or recent price tips crosses into advisory territory," said Ketan Mukhija, senior partner at Burgeon Law, citing a circular.

"Grey areas persist, showing examples from specific sectors, using old trading simulations, or making hints about the current market that could be treated as advice if they influence investment choices," he said. The safest course for educators is to keep "education strictly educational," he said, citing the Securities and Exchange Board of India's (Sebi's) readiness to impose bans, seek refunds, and initiate criminal prosecution.