The Securities and Exchange Board of India (SEBI), the stock market regulator, has banned actor Arshad Warsi, his wife, his brother, and 59 other people from trading in the stock market for one year. This action was taken because they were involved in increasing the share price of a company called Sadhna Broadcast Ltd (now renamed Crystal Business System Ltd) in an artificial way, and then selling those shares to make a profit — a practice known as “pump and dump.”
SEBI also fined each of these people Rs 5 lakh and asked them to return Rs 1.05 crore, which they made illegally.
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According to SEBI, Arshad Warsi and others worked with a person named Manish Mishra, who created false positive news about Sadhna Broadcast Ltd to attract investors to buy its shares. SEBI found WhatsApp chats between Mishra and Warsi that showed their connection.
Warsi, his wife, and brother said they were new to the stock market and did not understand the details. They claimed they were tricked by Mishra and even lost money because of the trades Mishra suggested.
SEBI’s investigation showed that Warsi traded shares not only through his account but also through the accounts of his wife and brother. WhatsApp messages showed Manish Mishra planned to send Rs 25 lakh each to the bank accounts of Warsi, his wife, and brother.
In total, SEBI has banned 7 people from the market for 5 years and 54 people for 1 year.
SEBI’s probe found that there was a planned scheme to raise the price of Sadhna Broadcast’s shares by spreading false information through YouTube videos and organized trading. After the price went up, the company promoters sold their shares to small investors at a high price.
The false content on YouTube and an expensive marketing campaign were used to attract many investors. SEBI’s investigation covered the period from March to November 2022. The complaint to SEBI included details about the fake YouTube videos, channels, and dates when they were posted.
SEBI identified 5 YouTube channels — The Advisor, Midcap Calls, Profit Yatra, Moneywise, and India Bullish — which spread wrong information about the company’s financial health and future. Manish Mishra was found to be running several of these channels.
About 45% of the trading was found to be structured, meaning coordinated trades between connected people to create a false demand for the shares.
SEBI also found the promoters of Sadhna Broadcast were involved. They traded shares right after the fake YouTube videos were released.
The biggest winner in this scam was Gaurav Gupta, who made Rs 18.33 crore. Another company, Sadhna Bio Oils Pvt. Ltd, earned Rs 9.41 crore. SEBI has ordered these people to give back the illegal money they made.
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SEBI also fined Manish Mishra Rs 5 crore, and other accused individuals like Gaurav Gupta, Rakesh Kumar Gupta, Subhash Agarwal, Piyush Agarwal, and Lokesh Shah were fined Rs 2 crore each. Jatin Manubhai Shah was fined Rs 1 crore.
An IPS officer involved in this case settled with SEBI separately.
