Actor Arshad Warsi, family banned by SEBI for one year over stock market fraud

SEBI finds evidence of a pump-and-dump scheme involving celebrities and YouTube promotions

The Securities and Exchange Board of India (SEBI) has barred actor Arshad Warsi, his wife Maria Goretti, and his brother from participating in the stock market for one year. The action is linked to a stock manipulation case involving Sadhna Broadcast Ltd, now renamed Crystal Business System Ltd.

Scheme to inflate share prices

SEBI stated that the Warsi family was part of a larger scheme aimed at artificially inflating the price of Sadhna Broadcast shares. This manipulation allowed the group to offload shares to retail investors at inflated prices. As part of the penalty, SEBI has also ordered each of them to pay a fine of Rs.5 lakh and return illegal gains totaling Rs.1.05 crore.

The scheme allegedly involved coordinated efforts with Manish Mishra, who played a key role in spreading misleading promotions about the company. Mishra used paid YouTube campaigns and misleading content to create a false narrative around Sadhna Broadcast’s prospects.

Misleading promotions and covert transactions

SEBI uncovered WhatsApp conversations in which Mishra appeared to offer Rs.25 lakh each to Arshad Warsi, Maria Goretti, and his brother. While the trio claimed they were inexperienced in trading, SEBI found that Arshad Warsi had executed trades not only through his account but also through his wife’s and brother’s accounts.

The manipulation strategy resembled a classic “pump-and-dump” model, where the share price was artificially raised through false information, followed by the sale of large volumes of shares at inflated prices.

Scope of the investigation and market impact

The investigation, covering March 8 to November 30, 2022, revealed that seven individuals were banned from the market for five years, while 54 others received one-year bans. SEBI traced 45% of the trades during this period to connected accounts.

Multiple YouTube channels—The Advisor, Midcap Calls, Profit Yatra, Moneywise, and India Bullish—were used to spread deceptive videos touting the company’s financial strength. These promotions led to significant investor interest based on false claims.

Key individuals profited substantially: Gaurav Gupta earned Rs.18.33 crore, and Sadhna Bio Oils Pvt Ltd made Rs.9.41 crore. SEBI has ordered the return of these profits.

Financial penalties and legal outcomes

In addition to bans, SEBI has levied significant financial penalties. Manish Mishra was fined Rs.5 crore. Other key players—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 unnamed IPS officer implicated in the case settled with SEBI by paying the penalty under the settlement provisions.

SEBI’s final order and investor caution

This final order follows SEBI’s interim ruling issued in March 2023. The case highlights the increasing use of social media to manipulate retail investor behavior and underlines the need for caution when relying on online investment tips.

SEBI emphasized that investors should verify facts independently and avoid making decisions based on unverified content circulating on platforms like YouTube and WhatsApp.

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