Sadhna Broadcast case: Sebi bars Arshad Warsi, wife and 57 others from market up to 5 years
According to reports the regulator imposed fines of Rs 5 lakh each on Warsi and his wife, who have both been restrained from the securities market for one year, according to a Sebi order issued on Thursday. The youtuber couple was charged for posting misleading videos on YouTube channels recommending investors to buy shares of Sadhna Broadcast.
The other 57 entities, including promoters of Sadhna Broadcast, faced penalties ranging from Rs 5 lakh to Rs 5 crore.
In addition to these penalties, Sebi directed all 59 entities to disgorge unlawful gains totalling Rs 58.01 crore along with 12 percent interest per annum, jointly and severally, from the end of the investigation period until the date of actual payment. The order revealed that Arshad Warsi earned profits of Rs 41.70 lakh, while Maria Goretti made Rs 50.35 lakh from the manipulation.
The Sadhna Broadcast stock manipulation case centers on a coordinated "pump-and-dump" scheme executed through misleading YouTube videos to artificially inflate the company's share price. In mid-2022, videos on channels like The Advisor and Moneywise falsely claimed that Sadhna Broadcast Ltd. would be acquired by the Adani Group, enticing retail investors to purchase shares. This surge in buying volume led to a significant price increase, allowing promoters and insiders to sell their holdings at inflated prices.
The 109-page order identified Gaurav Gupta, Rakesh Kumar Gupta, and Manish Mishra as the masterminds behind the scheme. Subhash Aggarwal, a director of the registrar and transfer agent (RTA) of Sadhna Broadcast Ltd, acted as an intermediary between Manish Mishra and the promoters. Sebi also named Peeyush Agarwal and Lokesh Shah as facilitators who provided accounts controlled by them to aid the manipulative activities.
The order described the scheme as a classic 'pump-and-dump' operation executed in two phases. Initially, connected and promoter-linked entities executed trades among themselves to inflate the stock price artificially. Due to low liquidity, even small volume trades significantly impacted the price, creating a false market interest. In the second phase, misleading promotional videos were uploaded on YouTube channels such as Moneywise, The Advisor, and Profit Yatra, all run by Manish Mishra, to lure retail investors by amplifying the artificial market activity.
Sebi's whole-time member Ashwani Bhatia stated, 'The overall conduct of the noticees reveals a classic pump-and-dump scheme, involving collusive trading to push prices up, followed by aggressive promotion and a coordinated sell-off by promoters.'
While most entities were penalized, no monetary fine was imposed on Varun Media Pvt Ltd due to ongoing insolvency proceedings, though the company remains subject to disgorgement orders.
The investigation was initiated after complaints received between July and September 2022 alleged price manipulation and offloading of shares in Sadhna Broadcast's stock, facilitated by misleading YouTube videos.
An interim Sebi order was issued on March 2, 2023, against 31 entities, including the promoters, before the final order against 59 parties was passed.
This crackdown highlights Sebi's intensified efforts to curb fraudulent and unfair trade practices in the securities market and protect investors from manipulative schemes.
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