Why Sebi short-circuited Munna Bhai's Circuit: Arshad Warsi, wife among 59 banned for role in YouTube stock manipulation scheme

Economic Times

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Bollywood meets the boiler room
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The script for the scam
SEBI's findings and fallout
Celebrity in the crosshairs
SEBI's action timeline
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Munna Bhai's beloved sidekick has run afoul of the law, but this time, it's not on the silver screen. Arshad Warsi , best known for his iconic role as ' Circuit ' in the Munna Bhai films, now finds himself entangled in a very different plot— in a securities scam that played out across YouTube and the Indian stock market. India's markets regulator, Securities and Exchange Board of India SEBI ), on Thursday barred Warsi , his wife Maria Goretti , and 57 others from trading in securities for periods ranging from one to five years, alleging they were part of a pump-and-dump scheme that misled retail investors into buying shares of Sadhna Broadcast Ltd through manipulated online content and coordinated trading.In a sweeping crackdown involving 59 individuals and entities, SEBI said the couple participated in a carefully orchestrated campaign to artificially inflate the price of Sadhana Broadcast shares and dump them on unsuspecting retail investors.SEBI imposed a penalty of Rs 5 lakh each on the Bollywood couple, while also ordering them to return illicit profits, Rs 41.70 lakh for Warsi and Rs 50.35 lakh for Goretti, made from trading Sadhna Broadcast shares during the manipulation window. In total, SEBI directed 59 entities to jointly disgorge Rs 58.01 crore in unlawful gains, along with 12% annual interest, under a sweeping final order issued May 30.The case centers on what SEBI has called a 'carefully structured' two-phase scheme that involved rigging the stock price through circular trading and luring retail investors with viral YouTube videos recommending the scrip.According to the 109-page order, the operation was orchestrated primarily by Manish Mishra, who controlled five YouTube channels—Moneywise, The Advisor, Profit Yatra, India Bullish, and Midcap Calls—that uploaded promotional videos featuring exaggerated claims and baseless price targets for Sadhna Broadcast.SEBI's investigation found that the scheme kicked off with structured trades between connected parties to artificially drive up the price of the low-liquidity stock. The trading activity, though small in volume, created the illusion of investor interest and upward momentum.Once the stage was set, the second phase began. Between July and November 2022, a series of videos were uploaded on the Mishra-run channels, touting Sadhna Broadcast as a hidden gem. The videos falsely claimed the company held a 5G license, was being acquired by the Adani Group, had secured a Rs 1,100 crore contract with a U.S. investor to produce devotional films, and had major mutual fund backing. Retail investors, drawn in by the fabricated bullish narrative, poured into the stock just as the operators began to exit.The entire operation was amplified through paid marketing campaigns on Google Ads worth over Rs 3.39 crore, funded by Mishra and his associates. The videos garnered millions of views before being marked private.According to the order signed by SEBI Whole-Time Member Ashwani Bhatia, the operation 'revealed a classic pump-and-dump scheme' that involved 'collusive trading, aggressive promotional activity to draw in retail investors, and finally, a coordinated sell-off by the promoters.'Warsi and Goretti purchased shares just days before the first videos went live and offloaded them soon after prices surged. Their trades were matched with accounts of known operators, including Jatin Shah and Angad Rathod, highlighting their integration into the broader scheme.SEBI traced connections between nearly all 59 noticees through call records, financial transfers, trading behaviour, common addresses, and shared IP logs. Entities were categorized as misleading message disseminators, volume creators, net sellers, and information carriers. Promoter group members and employees of Sadhna Broadcast—now renamed Crystal Business System Ltd—were also found to have actively participated or facilitated the operation.Warsi, who earned critical and popular acclaim for playing 'Circuit' in Munna Bhai M.B.B.S. and Lage Raho Munna Bhai, now joins the growing list of public figures ensnared in financial investigations involving market manipulation and social media influence. The order against him follows an interim action issued in March 2023 and a detailed investigation spanning trades from March to November 2022.In addition to the couple's one-year market ban, SEBI handed longer debarments—up to five years—to others deemed central to the scheme. These include Gaurav Gupta, Rakesh Kumar Gupta, and Mishra himself, along with broker-linked entities and shell companies used to circulate trades and book gains.The final order follows an investigation period spanning March 8 to November 30, 2022. SEBI launched its inquiry after receiving complaints between July and September 2022 that alleged 'price manipulation and subsequent offloading of shares' in Sadhana Broadcast. The complaints also claimed misleading YouTube content was part of a paid marketing campaign aimed at retail investors.An interim order was issued on March 2, 2023, against 31 entities, including the company's promoters. This week's final ruling expands enforcement action to 59 parties.While most entities faced monetary penalties, SEBI exempted Varun Media Pvt Ltd—a promoter group entity currently undergoing insolvency proceedings—from any financial penalty. However, it clarified that the disgorgement order would remain applicable and further action would be addressed through a separate process.The case stresses on SEBI's sharpened focus over the intersection of social media and securities fraud. By targeting a celebrity and leveraging YouTube influencers, the operation capitalized on the retail boom in India's stock markets and the growing clout of online financial content creators.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)