SEBI Bans Actor Arshad Warsi, 58 Others From Securities Markets For Up To 5 Years

NDTV

4 days ago

New Delhi:
Markets regulator Sebi has barred Bollywood actor Arshad Warsi, his wife Maria Goretti, and 57 other entities from the securities markets for 1-5 years in a case related to misleading videos on YouTube channels recommending investors to buy shares of Sadhna Broadcast.
The regulator imposed a fine of Rs 5 lakh each on Warsi and his wife Maria. The couple were restrained by the markets watchdog from the securities market for 1 year, as per an order passed by Sebi on Thursday.
Sebi has also levied penalties of Rs 5 lakh to Rs 5 crore on 57 other entities, including promoters of Sadhna Broadcast (now Crystal Business System Ltd).
Apart from the debarment, Sebi directed these 59 entities to disgorge total unlawful gains worth Rs 58.01 crore along with 12 per cent interest per annum jointly and severally from the end of the investigation period till the date of actual payment.
Sebi noted that Arshad had made a profit of Rs 41.70 lakh and his wife earned a profit of Rs 50.35 lakh.
In the final order, Sebi found that the masterminds behind this whole operation were Gaurav Gupta, Rakesh Kumar Gupta and Manish Mishra. Subhash Aggarwal, who also happened to be a director of the RTA of Sadhna Broadcast Ltd (SBL), acted as the go between Manish Mishra and the promoters, the order stated.
These individuals were the central characters who planned and executed the manipulative scheme, Sebi said.
Further, the regulator observed that Peeyush Agarwal and Lokesh Shah facilitated accounts controlled by them to be used for the manipulative designs of Manish Mishra and the promoters of SBL.
The former was a dealer at Choice and the latter the owner of the Delhi franchise of the stockbroker. They were both vital cogs who facilitated large scale manipulation in the scrip.
Similarly, Jatin Shah played a leading role in operationalising the scheme, while other entities facilitated the manipulative designs or were in it to make a quick buck, the order said.
As per the 109-page order, Sebi said the noticees (entities) have acted as information carriers or assisted in placing the manipulative trades, but not traded in the scrip from their own accounts.
Sebi said the structured scheme executed in two coordinated phases. In the first phase, connected and promoter-linked entities executed trades among themselves to steadily inflate the price of the scrip and create a false appearance of market interest.
These trades though often small in volume had a disproportionate impact on price due to low liquidity, allowing the perpetrators to push the scrip upward with relatively minimal trading outlay.
In the second phase of the scheme, misleading and promotional videos were disseminated across YouTube channels such as Moneywise, The Advisor, and Profit Yatra, all operated by Manish Mishra, the order said.
These videos presented SBL as a promising investment opportunity and were timed to coincide with and amplify artificial market activity, it added.
"The overall conduct of the noticees has revealed a classic pump-and-dump scheme. 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," Sebi's whole time member Ashwani Bhatia said in the order.
Accordingly, these 59 entities violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules.
In addition, Sebi said that no monetary penalty is being imposed on Varun Media Pvt Ltd, a promoter entity, due to pending insolvency proceedings. However, the direction for disgorgement will remain applicable and proceedings against the company will be decided through a separate order.
The order came after the Securities and Exchange Board of India (Sebi) received complaints during the period July-September 2022, alleging that there was price manipulation and subsequent offloading of shares in the scrip of television channel SBL.
The complaints alleged that misleading YouTube videos with false content about the company were uploaded to lure investors.
Thereafter, Sebi conducted a detailed investigation into the alleged manipulation in the scrip of SBL for the period March 8, 2022 to November 30, 2022.
Sebi said that an interim order was passed by the regulator in March 2, 2023 against 31 entities, including promoters of SBL.