SEBI on Thursday (May 29) barred Bollywood actor Arshad Warsi, his wife Maria Goretti, and 57 other entities from the securities markets for periods ranging from 1-5 years in a case related to misleading videos on YouTube channels recommending investors to buy shares of Sadhana Broadcast.
The regulator imposed a fine of ₹5 lakh each on Warsi and his wife Maria.
SEBI also levied penalties in the range of ₹5 lakh to ₹5 crore on 57 other entities, including promoters of Sadhana Broadcast (now Crystal Business System Ltd).
Apart from the debarment, SEBI also directed these entities to disgorge total unlawful gains of ₹58.01 crore along with 12% interest per annum from the end of the investigation period till the date of actual payment.
SEBI noted that Arshad Warsi had made a profit of ₹41.70 lakh and his wife earned a profit of ₹50.35 lakh.
In the final order, SEBI found that the masterminds behind this whole operation were Gaurav Gupta, Rakesh Kumar Gupta, and Manish Mishra. Subhash Aggarwal, who also happened to be a director of the RTA of Sadhana Broadcast Ltd (SBL), acted as the go between Manish Mishra and the promoters, the order stated.
These individuals were the central characters who planned and executed the manipulative scheme, SEBI said.
Further, the regulator observed that Peeyush Agarwal and Lokesh Shah facilitated accounts controlled by them to be used for the manipulative designs of Manish Mishra and the promoters of SBL.
The former was a dealer at Choice and the latter was the owner of the Delhi franchise of the stockbroker. They were both vital cogs who facilitated large scale manipulation in the scrip.
Similarly, Jatin Shah played a leading role in operationalising the scheme, while other entities have facilitated the manipulative designs or were in it to make a quick buck, the order said.
As per the 109-page order, SEBI said noticees (entities) have acted as information carriers or assisted in placing the manipulative trades, but not traded in the scrip from their own accounts.
SEBI said carefully structured scheme was executed in two coordinated phases. In the first phase, connected and promoter-linked entities executed trades among themselves to steadily inflate the price of the scrip and create a false appearance of market interest.
These trades though often small in volume had a disproportionate impact on price due to low liquidity, allowing the perpetrators to push the scrip upward with relatively minimal trading outlay.
In the second phase of the scheme misleading and promotional videos were disseminated across YouTube channels such as Moneywise, The Advisor, and Profit Yatra, all operated by Manish Mishra, the order said.
These videos presented SBL as a promising investment opportunity and were timed to coincide with and amplify artificial market activity, it added.
The order came after the Securities and Exchange Board of India (SEBI) received complaints during the period July to September 2022, alleging that there was price manipulation and subsequent offloading of shares in the scrip of SBL.
It was also stated in the complaints that YouTube videos were being uploaded with false content to lure investors and a paid marketing campaign worth crore was undertaken to make the videos reach a wider audience.
An interim order was passed by the regulator on March 2, 2023 was passed against 31 entities.
Thereafter, SEBI conducted a detailed investigation into the alleged manipulation in the scrip of SBL for the period from March 8, 2022 to November 30, 2022.
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The regulator imposed a fine of ₹5 lakh each on Warsi and his wife Maria.
SEBI also levied penalties in the range of ₹5 lakh to ₹5 crore on 57 other entities, including promoters of Sadhana Broadcast (now Crystal Business System Ltd).
Apart from the debarment, SEBI also directed these entities to disgorge total unlawful gains of ₹58.01 crore along with 12% interest per annum from the end of the investigation period till the date of actual payment.
SEBI noted that Arshad Warsi had made a profit of ₹41.70 lakh and his wife earned a profit of ₹50.35 lakh.
In the final order, SEBI found that the masterminds behind this whole operation were Gaurav Gupta, Rakesh Kumar Gupta, and Manish Mishra. Subhash Aggarwal, who also happened to be a director of the RTA of Sadhana Broadcast Ltd (SBL), acted as the go between Manish Mishra and the promoters, the order stated.
These individuals were the central characters who planned and executed the manipulative scheme, SEBI said.
Further, the regulator observed that Peeyush Agarwal and Lokesh Shah facilitated accounts controlled by them to be used for the manipulative designs of Manish Mishra and the promoters of SBL.
The former was a dealer at Choice and the latter was the owner of the Delhi franchise of the stockbroker. They were both vital cogs who facilitated large scale manipulation in the scrip.
Similarly, Jatin Shah played a leading role in operationalising the scheme, while other entities have facilitated the manipulative designs or were in it to make a quick buck, the order said.
As per the 109-page order, SEBI said noticees (entities) have acted as information carriers or assisted in placing the manipulative trades, but not traded in the scrip from their own accounts.
SEBI said carefully structured scheme was executed in two coordinated phases. In the first phase, connected and promoter-linked entities executed trades among themselves to steadily inflate the price of the scrip and create a false appearance of market interest.
These trades though often small in volume had a disproportionate impact on price due to low liquidity, allowing the perpetrators to push the scrip upward with relatively minimal trading outlay.
In the second phase of the scheme misleading and promotional videos were disseminated across YouTube channels such as Moneywise, The Advisor, and Profit Yatra, all operated by Manish Mishra, the order said.
These videos presented SBL as a promising investment opportunity and were timed to coincide with and amplify artificial market activity, it added.
The order came after the Securities and Exchange Board of India (SEBI) received complaints during the period July to September 2022, alleging that there was price manipulation and subsequent offloading of shares in the scrip of SBL.
It was also stated in the complaints that YouTube videos were being uploaded with false content to lure investors and a paid marketing campaign worth crore was undertaken to make the videos reach a wider audience.
An interim order was passed by the regulator on March 2, 2023 was passed against 31 entities.
Thereafter, SEBI conducted a detailed investigation into the alleged manipulation in the scrip of SBL for the period from March 8, 2022 to November 30, 2022.
Also Read: Planning to study abroad? 9 things to keep in mind when applying to colleges in the UK
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