Why actor Arshad Warsi, his wife have been barred from trading in securities market
The Securities and Exchange Board of India (SEBI) has banned Bollywood actor Arshad Warsi, his wife Maria Goretti, and 57 others from trading in the securities markets for up to five years, reported news agency PTI.
The ban comes after an investigation revealed their involvement in a scheme to manipulate the stock prices of Sadhna Broadcast, now known as Crystal Business System Ltd.
Actor Arshad Warsi and his wife were fined ₹5 lakh each and banned from the securities market for one year. SEBI said Arshad made a profit of ₹41.70 lakh and Maria earned ₹50.35 lakh through these trades.
The market regulator also fined the other 57 entities between ₹5 lakh and ₹5 crore each. The group has been asked to return ₹58.01 crore in illegal profits, along with 12% interest per year from the end of the investigation period until full payment is made.
According to SEBI's final order issued on Thursday, misleading videos were posted on YouTube channels urging people to invest in Sadhna Broadcast. These videos made the stock look promising, creating artificial demand and pushing its price.
SEBI described the scheme as a typical "pump-and-dump."
In this strategy, prices are pushed up using false information. Once the prices rise, the manipulators sell their shares for a profit, leaving regular investors with losses.
'The price was systematically pushed upward through collusive trading, followed by aggressive promotional activity to draw in retail investors, and finally, a coordinated sell-off by the promoters,' said Ashwani Bhatia, SEBI's whole-time member, reported PTI.
The investigation identified Gaurav Gupta, Rakesh Kumar Gupta, and Manish Mishra as the main planners of the operation. SEBI said that Subhash Aggarwal, a director of Sadhna Broadcast's registrar and transfer agent (RTA), acted as the link between Mishra and the company promoters.
Manish Mishra also ran YouTube channels such as Moneywise, The Advisor, and Profit Yatra. These were used to spread promotional videos in the second phase of the scheme.
SEBI also found that Peeyush Agarwal, a dealer at Choice, and Lokesh Shah, who ran a Delhi-based brokerage franchise, played key roles in helping carry out the plan. Jatin Shah was also named for executing the scheme.
Some entities did not trade using their own accounts but helped pass on information or place trades to aid the fraud.
Connected entities first traded among themselves to slowly raise the stock price. Because the stock had low trading volumes, even small trades made a big difference in price. In the second phase, the misleading videos were released to lure investors.
The scam came to light after the regulating body received complaints between July and September 2022 about unusual stock price movements and misleading online content promoting the company.
Sebi then launched a detailed investigation covering the period from March 8, 2022, to November 30, 2022. An earlier interim order was issued in March 2023 against 31 of the entities.
One promoter company, Varun Media Pvt Ltd, has not been fined due to ongoing insolvency proceedings, but it is still required to return its share of the illegal profits. Sebi said further decisions in this case will be made separately.
The 109-page Sebi order concluded that all 59 entities broke rules meant to stop fraud and unfair practices in the market.
(With PTI inputs)
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