Untick the Finfluencer Box: India's Social Media Investment Scam Exposed

Corporate records and regulatory documents reveal how a network of social media influencers in India have been exploiting loopholes in financial regulations to operate multi-crore investment schemes. The recent crackdown by the Securities and Exchange Board of India (SEBI) on trading influencer Avadhut Dinkar Sathe has exposed what regulators describe as just the tip of an enormous unregulated scam operating openly across social media platforms.

Sathe, along with his wife Gouri and Avadhut Sathe Trading Academy Pvt. Ltd., has been barred from the securities market after SEBI impounded Rs. 546.16 crore in unlawful gains. The case highlights how digital influence, aggressive marketing, and misplaced investor confidence can combine to create large-scale financial harm without the typical markers of cyber fraud.

Background and Context

The roots of India's finfluencer boom lie in the post-COVID period, when lockdowns, work-from-home culture, and increased screen time fundamentally altered how Indians engaged with money and markets. According to market data, millions of first-time investors opened demat accounts during this period, and stock market content became a staple on social media feeds.

"The post-COVID period fundamentally changed how people engaged with the stock market," explains a wealth-management expert familiar with regulatory proceedings. "Work-from-home culture gave individuals more time, and social media turned investing into a do-it-yourself activity. This environment naturally led to the rise of finfluencers, where market advice was consumed in the same way as lifestyle content—quickly, visually, and without verification."

Market conditions further amplified this trend. For nearly three consecutive years after the pandemic, Indian markets delivered strong returns, creating what experts describe as a false sense of confidence among retail investors, many of whom began believing that losses were unlikely and professional advice was unnecessary.

Key Figures and Entities

Avadhut Sathe positioned himself as a successful trader-mentor, building a substantial online presence through Instagram reels, YouTube videos, and webinars. His content consistently showcased trading screens, impressive profit figures, and student success stories, projecting an image of consistent profitability and market mastery.

Once trust was established, followers were systematically directed into paid programmes offered by Avadhut Sathe Trading Academy. According to SEBI's investigation findings, these offerings ranged from basic online courses to premium mentorship packages costing several lakh rupees, with some participants paying up to Rs. 6-7 lakh for what was marketed as "educational" content—a crucial distinction that allowed the operation to expand rapidly without immediate regulatory scrutiny.

The scale of the operation was significant. Over time, the academy collected over Rs. 600 crore from participants across multiple batches, operating without registration as an investment adviser or research analyst, and without following disclosure or suitability norms mandated by Indian securities law.

Legal and Financial Mechanisms

SEBI's investigation revealed that the academy's activities went far beyond general financial education. During live sessions and closed groups, Sathe and his team allegedly provided specific stock and derivatives recommendations, including exact entry prices, stop-loss levels, and profit targets. The operation included real-time guidance using live market data and regular displays of their own trading positions, encouraging followers to mirror trades directly.

According to SEBI's interim order, these activities constituted investment advisory and research activity—regulated services that require mandatory registration under Indian securities law. The regulatory body noted that Sathe's activities continued even after warnings were issued, prompting the eventual enforcement action.

To sustain growth and recruitment, the academy heavily promoted selective success stories while obscuring losses. SEBI later found that several profit claims were exaggerated, and that many participants had in fact suffered significant losses after following the recommended trades.

International Implications and Policy Response

The Sathe case represents a modern form of financial fraud that operates openly through legitimate platforms rather than through fake links or stolen passwords. Instead, it relies on influence, confidence, and aspiration—making it harder to detect and easier to trust than traditional forms of investment fraud.

According to securities experts, this case reflects a broader regulatory push worldwide to separate genuine professionals from social-media-driven market commentators. "SEBI has made sustained efforts to bring accountability into the advisory ecosystem," notes a regulatory compliance specialist. "Registration norms, audits, disclosure requirements, and submission of trading records are meant to separate genuine professionals from unverified market commentators. These measures are designed to protect investors, not restrict participation."

The case also underscores how finfluencer culture has blurred the line between education and advice, often at the cost of investor protection—a concern echoed by financial regulators globally as social media increasingly becomes the primary source of financial information for retail investors.

Sources

This report draws on SEBI's interim order and investigation findings, corporate filings, securities regulations, and expert analysis on the growing challenge of unregistered financial advice on social media platforms in India.