SEBI Indefinitely Prohibits Actor Arshad Warsi & 30 Others From Accessing The Securities Market

On Thursday, the Securities and Exchange Board of India (SEBI) issued an interim order that indefinitely prohibits Bollywood actor Arshad Warsi, his wife Maria Goretti, and 29 others from accessing the securities market. This penalty was imposed as a consequence of their involvement in a 'pump and dump' scheme, wherein they manipulated the price of a stock by providing false information to attract investors and then selling their shares at an inflated price.

SEBI received information about certain entities manipulating the price of Sadhna Broadcast Limited's shares and unloading their holdings. Allegedly, these entities created YouTube videos containing misleading content and invested crores of rupees in a paid marketing campaign to entice people to invest in the company. Once investors entered the market, the entities sold their shares at a higher price.

In the latter half of July 2022, two YouTube channels named Midcap Calls and Profit Yatra, operated by Manish Mishra, uploaded false and misleading videos about Sadhna Broadcast Limited. These videos contained misleading information and recommended that viewers buy Sadhna stock for exceptional profits. Mishra, identified as a disseminator of misleading messages (MMD) 1, paid ₹4,72,24,967 to Google AdSense to promote these videos on YouTube.

Mishra and another MMD, Manjari Tiwari, were discovered to have sold their Sadhna shares between July and September 2022, despite recommending that viewers buy them on YouTube channels. They took advantage of the increased price caused by unsuspecting retail investors entering the Sadhna market and sold their shares at inflated prices to earn profits.

In the case, Warsi and Goretti were categorized as volume creators (VCs). VCs are individuals who buy and sell shares of a company during a specific period, thus increasing trading volumes and generating interest in the stock. The duo was discovered to have earned profits of ₹29,43,649 and ₹37,56,816 from purchasing and selling Sadhna shares, respectively.

SEBI's investigation concluded that based on the entire modus operandi and connections between the Noticees, including the company's promoters and directors, it appears that they were involved in a coordinated scheme to lure unsuspecting investors into purchasing Sadhna securities, causing an unnatural increase in the stock's price. They subsequently sold their shares at inflated prices, resulting in illegal gains at the expense of new investors. This coordinated scheme is a violation of Section 12A(a), (b), and (c) of the SEBI Act, along with Regulation 3(a), (b), (c), (d), and Regulation 4(1) and 4(2)(a), (d), (k) and (r) of the PFUTP Regulations.