Sebi bars actor Arshad Warsi, 58 other from capital markets for alleged pump & dump activities

The Securities and Exchange Board of India (Sebi) has unveiled a stock manipulation scheme involving Sadhna Broadcast Ltd (SBL), with allegations pointing towards the use of WhatsApp messages to coordinate the scheme. The board has taken decisive action against several individuals, including actor Arshad Warsi, for their alleged involvement.

Gaurav Gupta emerged as the largest beneficiary, reportedly earning Rs 18.33 crore through the scheme. Meanwhile, Sadhna Bio Oils Pvt. Ltd also profited, gaining Rs 9.41 crore. SEBI has mandated the disgorgement of these illicit gains as part of its regulatory response.

A series of penalties have been levied by SEBI, including a Rs 5 crore fine on Manish Mishra. Additionally, several other individuals, including Gaurav Gupta, have been fined Rs 2 crore each. Jatin Manubhai Shah received a Rs 1 crore penalty. These steps are part of SEBI's broader crackdown on financial misconduct.

The scheme included a 'pump and dump' strategy, utilising misleading YouTube videos to artificially inflate SBL's share price before promoters offloaded their stakes. This fraudulent activity was detailed in SEBI's investigation, which spanned from 8 March 2022 to 30 November 2022.

SEBI also uncovered a paid marketing campaign designed to propagate false content on YouTube, attracting unsuspecting investors. This campaign involved structured trading and misleading narratives about SBL's financial health and prospects.

Arshad Warsi, along with his wife and brother, has been barred from the securities market for one year. SEBI's investigation revealed Warsi's involvement in the scheme, including communication with Manish Mishra, who was central to the operation. Despite Warsi's claims of ignorance regarding stock market intricacies, evidence suggested otherwise.

In a significant revelation, SEBI identified five YouTube channels—The Advisor, Midcap Calls, Profit Yatra, Moneywise, and India Bullish—as participants in spreading false information. These channels played a role in the fraudulent promotion of SBL, further implicating those involved.

The WhatsApp chats between Manish Mishra and Arshad Warsi revealed an intent to transfer Rs 25 lakhs each to Warsi, his wife, and his brother. This detail underscores the level of coordination and planning within the scheme.

SEBI's final order includes a five-year market ban for seven individuals and a one-year ban for 54 others, reflecting the severity of the offences. The agency's actions highlight its commitment to maintaining market integrity.

In addition to monetary penalties, SEBI has ordered the disgorgement of Rs 1.05 crore from Warsi and his family. This comprehensive action by SEBI serves as a warning to those contemplating similar fraudulent activities in the future.