SEBI Bans Arshad Warsi, 30 Entities Over The ‘Pump and Dump’ Case; Latter Comes Out Saying That He Has No Knowledge Of Stocks

Recently, the Securities and Exchange Boards of India (SEBI)  banned 31 entities, including the actor Arshad Warsi and his wife, Maria Goretti, the YouTuber Manish Mishra, and the promoters of the Sadhna Broadcast involving Shreya Gupta, Gaurav Gupta, Saurabh Gupta. The latter was banned from the securities market for sharing false information and misleading videos recommending investors buy particular company shares in their YouTube channels.

SEBI has even charged the 31 entities for making illegal profits accumulating to 41.85 crores INR after the entities were involved in a pump and dump scam. The regulatory authority has ordered the 31 individuals to open an escrow account switch to a commercial bank and deposit the impounded valuation within 15 days.

But what scam made SEBI take a drastic step against the entities?

SEBI has mentioned in its order that the regulatory authority has received a tip that the entities were involved in price manipulation and offloading the shares in their Sadhna Broadcast. The complainants have even stated that the misleading YouTube videos were spreading false information about the company to gain the confidence of the investors. The YouTube videos have shared false and misleading information to recommend them to purchase stakes in Sadhna Broadcast for earning extra profits.

When SEBI conducted a thorough investigation, they concluded that false and misleading content was uploaded about the stakes in Sadhna Enterprise on YouTube channels named Advisor and MoneyWise. Manish Mishra operated both channels. The Youtuber has claimed in his videos that the enterprise would be taken over by the Adani group and they will shift to the production of movies from TV production.

Furthermore, a big American corporation will bring a contract worth 1100 crore INR to release devotional movies, under the production unit.

After the release of the videos with falsified information, it was observed that there was an increase in prices and the trading volume of the production unit stocks. SEBI has informed that the utilization of patently misleading and false information has caused an increase in the small shareholders from 2167 to 55343, who ended up purchasing the stakes at an inflated price.

As a result, the key management individuals of Sadhna and other non-promoter shareholders were able to accumulate massive profits by selling a significant portion of their holdings at a comparatively high price.
SEBI has stated that the actions taken by the entities were against the infringement of the SEBI and the Prohibition of Fraud and Unfair Trade Practices Act.

But, why was Arshad Wasi involved in the case?
SEBI has identified 31 entities into various categories involving the creators of the YouTue channels, the net sellers, promoters, and the profit makers, i.e., the people involved in holding shares of the Sadhna enterprise and traded the shares in the period, Volume Creators, who purchased and sold shared prices of the stocks at the particular period, and the information carriers, who transmitted the falsified information.

Arshad Warsi and his Wife fall in the category of Volume Creators. They purchased and sold shares of sadhna enterprises during the examination period. They have contributed to the increase in trading volumes and rise in interest. Their orders have showcased that Arshad and his wife made profits of 29.43 lakhs and 37.58 lakhs INR respectively.

Sadhna Broadcast was started in 1994, where the organization operates several media-related businesses with the flagship being Sadhna TV, which is centered around socio-religious issues and broadcasts different religious activities around the country. The channel received immense success during the initial years because of its novel cause. Apart from that, the company even operates TV channels across diverse genres, as in the publication and advertising business.

The consequence of the scam came out to be heavy. Both the YouTube channels operated by Manish Mishra had to remove the falsified information. Arshad Warsi has taken over the media platform calling himself to be the victim of manipulation of stocks. He has even stated that he has no knowledge about stocks to commit a huge manipulation. Previously, he invested in Sharda stocks and lost his hard-earned money.

edited and proofread by nikita sharma