Mumbai: The Securities and Exchange Board of India (Sebi) has barred actor Arshad Warsi and his wife Maria Goretti from the stock market for a year, for their alleged involvement in stock manipulation. Warsi’s brother has also been banned by Sebi. This is related to Sadhna Broadcast Ltd (now known as Crystal Business System Ltd).
According to Sebi, the group was part of a scheme to artificially raise the price of Sadhna Broadcast shares before selling them to unsuspecting retail investors. Along with the ban, Sebi has also ordered them to pay a fine of Rs 5 lakh each and return illegal gains worth Rs 1.05 crore in total. This has been reported by India Today.
Sebi has claimed that Warsi and others worked with Manish Mishra, who played a key role in creating false buzz around the company. Mishra used misleading YouTube videos and paid campaigns to attract investors. Sebi apparently found WhatsApp chats between Mishra and Warsi which suggested that Mishra had offered to transfer Rs 25 lakh each to the bank accounts of Warsi, his wife, and his brother.
While the Warsis claimed they were new to stock trading and unaware of the risks, Sebi pointed out that Arshad Warsi had been trading not only from his own account but also from his wife’s and brother’s accounts. His statement was recorded on June 27, 2023.
In this case, Sebi has banned seven people from trading for five years and another 54 for one year. Sebi said the stock manipulation was a “pump and dump” scheme. The share price of Sadhna Broadcast was pumped up using false information, and then large amounts of shares were sold when the price was high.
The investigation found that YouTube channels like The Advisor, Midcap Calls, Profit Yatra, Moneywise, and India Bullish were used to spread misleading videos about the company’s financial health and future prospects. These channels claimed Sadhna Broadcast would perform well in future, which Sebi said was not true.
Sebi’s investigation covered the period between March 8, 2022 and November 30, 2022, India Today has reported. The probe started after a complaint was received that certain YouTube videos were giving false tips about the stock. The complainant also provided video links and names of the channels involved.
The false claims helped the promoters and associates sell their shares at high prices. Sebi found that nearly 45% of total trades during the period were made through linked accounts. WhatsApp messages showed that trades were made immediately after the release of the misleading videos.
The investigation also found that Gaurav Gupta made the highest profit from this scheme, earning Rs 18.33 crore, while Sadhna Bio Oils Pvt Ltd made Rs 9.41 crore. Sebi has asked both parties to return the money made from these trades.
Sebi also imposed heavy financial penalties on others involved. Manish Mishra was fined Rs 5 crore. Gaurav Gupta, Rakesh Kumar Gupta, Subhash Agarwal, Piyush Agarwal, and Lokesh Shah were each fined Rs 2 crore. Jatin Manubhai Shah was fined Rs 1 crore.
Interestingly, an IPS officer who was also found to be involved in the case settled the matter with Sebi by paying the required amount as per the settlement rules.
This final order follows Sebi’s earlier interim order in March 2023. Sebi’s findings show how social media and online content can be misused to trick retail investors. The case is seen as an example of why investors must be cautious and verify facts before making investment decisions based on tips from social media.
