SEBI Slaps Market Ban on Actor Arshad Warsi, 58 Others for Up to 5 Years

In a case involving deceptive YouTube videos suggesting that investors purchase shares of Sadhna Broadcast, markets regulator SEBI has banned Bollywood star Arshad Warsi, his wife Maria Goretti, and 57 other businesses from the securities markets for a period of one to five years.

Warsi and his wife, Maria, were fined INR 5 lakh apiece by the authority. According to an order issued by SEBI on May 29, the markets watchdog banned the pair from the securities market for a year.

 SEBI has also fined 57 additional companies, including the promoters of Sadhna Broadcast (now Crystal Business System Ltd.), between INR 5 lakh and NR 5 crore.

SEBI Putting a Strict Scanner

In addition to debarring these 59 organisations, SEBI ordered them to pay all unlawful gains totalling INR 58.01 crore, plus 12% annual interest, jointly and severally, from the conclusion of the inquiry period to the actual payment date.

According to SEBI, Arshad and his spouse made INR 41.70 lakh and INR 50.35 lakh, respectively. In the end, SEBI discovered that Manish Mishra, Rakesh Kumar Gupta, and Gaurav Gupta were the masterminds behind the entire scheme. According to the ruling, Subhash Aggarwal, who was also a director of Sadhna Broadcast Ltd's (SBL) RTA, served as a liaison between Manish Mishra and the promoters.

 As per SEBI, these people were the main players who devised and carried out the deceptive strategy. The regulator further noted that Lokesh Shah and Peeyush Agarwal enabled accounts under their control to be used for Manish Mishra's and SBL's promoters' deceptive schemes.

The latter owned the stockbroker's Delhi franchise, while the former was a dealer at Choice. Both of them were essential components that made it easier to manipulate the script on a broad scale.

According to the ruling, Jatin Shah was instrumental in putting the plan into action, while other organisations helped to assist the deceptive ideas or were involved for financial gain.

SEBI stated in the 109-page order that although the noticees (entities) did not trade in the scrip from their own accounts, they had either helped place the manipulative trades or served as information carriers.

SEBI’s Explanation of the Misconduct

SEBI claimed that the planned plan was carried out in two well-coordinated stages. In order to gradually raise the scrip's price and provide the impression that there was market interest, related and promoter-linked firms carried out trades among themselves throughout the first phase.

Due to low liquidity, these trades, with their frequently tiny volume, had a disproportionate effect on price, enabling the offenders to drive the scrip upward with comparatively little trading expenditure.

The order stated that throughout the second phase of the scam, promotional and deceptive videos were distributed on YouTube channels run by Manish Mishra, including Moneywise, The Advisor, and Profit Yatra.

It further stated that these videos, which were timed to correspond with and accentuate false market activity, portrayed SBL as a viable investment prospect. "A traditional pump-and-dump scheme has been exposed by the noticees' overall behaviour.

Ashwani Bhatia, a long-time member of SEBI, stated in the ruling that 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."

 As a result, these 59 organisations broke the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations. Furthermore, SEBI stated that Varun Media Pvt Ltd, a promoter firm, is not facing any financial penalties as a result of ongoing insolvency proceedings.

The disgorgement order will still be in effect, though, and the company's actions will be decided by a different order.