Explained: Why Arshad Warsi, wife Maria Goretti were banned by Sebi for 1 year
Bollywood actor Arshad Warsi and his wife Maria Goretti have been banned by the Securities and Exchange Board of India (Sebi) from the securities market for a period of one year. The ban is part of a larger order passed by Sebi in the case involving the manipulation of the stock price of Sadhna Broadcast Limited, which has now been renamed Crystal Business System Ltd.Sebi's investigation found that a group of people used YouTube videos containing false and misleading information to boost the price of Sadhna Broadcast shares. These videos were uploaded to popular YouTube channels like "The Advisor" and "Moneywise", and were watched by lakhs of people.The videos made claims such as that the company had a 5G licence, was going to be taken over by the Adani Group, and had signed a Rs 1,100 crore deal with a US company.According to the Sebi order, 'The contents of the aforesaid videos were false and misleading. These videos, it can be clearly held, were uploaded with a view to manipulating the share price of SBL.'The videos were promoted using paid advertisements on YouTube, and as more retail investors were attracted to the stock, the price began to rise sharply. Sebi found that the price increase was not natural and was instead a result of a planned and coordinated scheme involving misleading promotions and structured trading.As part of this scheme, Arshad Warsi and Maria Goretti bought shares of Sadhna Broadcast from other individuals who were also named in the Sebi order. On July 13, 2022, Arshad bought 1,87,500 shares from Jatin Shah and 14,241 shares from Heli Jatin Shah. On the same day, Maria bought 2,65,004 shares from Jatin Shah and 55,200 shares from Angad Rathod.Just days later, after the stock price had gone up due to the misleading videos, both Arshad and Maria sold their shares. According to Sebi, Maria sold 3,29,755 shares and Arshad sold 3,29,050 shares during this period.Sebi said the timing of these trades showed that Arshad and Maria were part of a group of 'connected entities' who offloaded shares at inflated prices, taking advantage of the artificial rise caused by the false promotions.'It was evident that both the volume and price of the scrip were driven up by the trading activity of connected entities during this phase,' Sebi said.'The YouTube recommendations contributed materially to the heightened trading activity and price movement which in turn, facilitated the offloading of shares by the connected entities at elevated prices,' the order added.The gains made by these trades came at the cost of unsuspecting retail investors who were misled into buying the shares based on false claims.After reviewing the entire case, Sebi passed its final order banning Arshad and Maria from accessing or dealing in the securities market for one year.The order said, 'Noticees 60, 61... are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities for a period of one (1) year from the date of this Order.'Arshad and Maria were among 59 individuals and entities banned by Sebi in this matter, which involved stock price manipulation, false social media promotions, and illegal gains from unsuspecting investors. The regulator's action follows a detailed investigation that included search and seizure of electronic evidence, examination of bank transactions, and analysis of trading data.
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