SAT Reserves Sebi Order Against Arshad Warsi in Pump-and-Dump Case

Sebi bans Arshad Warsi and his wife from manipulating Sadhna Broadcast shares through YouTube videos.

Bollywood actor Arshad Warsi challenged the Securities and Exchange Board of India (SEBI) order that barred him and his wife from the securities market for allegedly manipulating the share price of two broadcast companies.

SEBI alleged that certain entities uploaded misleading videos on YouTube, recommending investors buy shares of Sadhna Broadcast Ltd and Sharpline Broadcast containing untrue and deceptive advice. The regulator accused them of spreading fictitious information and using a ‘pump-and-dump’ scheme.

SEBI impounded illegal gains of Rs 54 crore made by the entities and banned Warsi, his wife, and some of the promoters of Sadhna Broadcast from the securities market for their alleged involvement in the price manipulation. Warsi refuted the allegations and claimed that he and his wife had no knowledge of the stock market and had taken advice and invested in Sharda.

SEBI directed the players to impound the unlawful gains individually, with the investigation carried out between April 27 and September 30, 2020. SEBI analysed the inquiry’s call data records and transaction details to establish a connection. The regulator reported that this opportunity made unlawful gains of Rs 42 crore for the perpetrators.
The Securities Appellate Tribunal (SAT) heard an appeal filed by Warsi and others against the interim order on manipulation in the script of Sadhna Broadcast, reserving SEBI’s ruling on Friday.

Arshad Warsi’s legal representatives denied the allegations and contended that neither he nor his wife appeared in the YouTube videos or promoted them. Nevertheless, they confirmed their association with the YouTube channel operator Manish Mishra. SEBI countered by claiming that Warsi and his wife were among the entities that purchased shares before the videos’ release, thereby contributing as volume creators. As a result, the market regulator instructed that bank account withdrawals be prohibited without its approval.

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