SEBI, in its stringent action against market manipulation, barred actor Arshad Warsi, his wife Maria Goretti, and 57 others from accessing the securities market. The regulatory body penalised individuals with bans ranging from one to five years for their involvement in a “pump-and-dump” scheme linked to Sadhna Broadcast Ltd, now renamed Crystal Business System Ltd.
One-Year Ban and Fines for Arshad Warsi and Maria
According to SEBI’s final order, the market regulator fined Arshad Warsi and Maria Goretti ₹5 lakh each and barred them from trading in the securities market for one year. This decisive action underscores SEBI’s commitment to maintaining market integrity and protecting investor interests.
In a significant move, SEBI has directed all 59 identified entities to jointly and severally disgorge unlawful gains totalling ₹58.01 crore. The regulator also mandated a 12% interest per annum on this amount, calculated from the end of the investigation period until full repayment. This hefty disgorgement order aims to recover the ill-gotten wealth generated through the manipulative practices.
SEBI Uncovers Classic “Pump-and-Dump” Scheme
SEBI’s comprehensive 109-page order meticulously detailed a “classic pump-and-dump” strategy executed in two distinct phases:
- Phase 1: Price Inflation through Collusive Trades: Promoter-linked entities engaged in collusive trades to artificially inflate Sadhna Broadcast’s stock price. This created a deceptive appearance of heightened market interest and demand for the shares.
- Phase 2: Misleading Promotional Videos: Following the artificial price inflation, the perpetrators released misleading promotional videos on YouTube channels such as Moneywise, The Advisor, and Profit Yatra. Manish Mishra, one of the key accused, operated all these channels. These videos strategically coincided with the inflated market activity, enabling the manipulators to offload their shares at significantly higher prices to unsuspecting retail investors.
Key Figures Identified in the Manipulation
SEBI’s investigation identified several key players who orchestrated and facilitated the illicit operation. Gaurav Gupta, Rakesh Kumar Gupta, and Manish Mishra emerged as the masterminds behind the entire scheme. Subhash Aggarwal acted as a crucial intermediary, connecting Mishra with the promoters. Furthermore, Peeyush Agarwal and Lokesh Shah facilitated the use of specific accounts for executing manipulative trades. Jatin Shah also played a significant role in implementing the complex scheme. The regulator noted that while some entities did not directly trade using their own accounts, they actively functioned as information carriers or provided support to the manipulative trading practices.
Violations and Ongoing Legal Consequences
All 59 entities face findings for violating SEBI’s Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations. Apart from the monetary fines, which range from ₹5 lakh to ₹5 crore, SEBI has initiated further steps to recover the ill-gotten gains from all accused parties. However, the disgorgement direction against this entity will remain in force, ensuring accountability for the illicit gains.
SEBI launched its investigation after receiving multiple complaints between July and September 2022, flagging potential price manipulation and suspicious YouTube content promoting Sadhna Broadcast. The final order, issued by SEBI Whole-Time Member Ashwani Bhatia, consolidates the findings from the entire investigation, which spanned from March 8 to November 30, 2022. This comprehensive crackdown reaffirms SEBI’s vigilance in safeguarding the Indian securities market.
