SEBI bars Arshad Warsi, wife from securities market for role in pump and dump scheme

The Securities and Exchange Board of India (SEBI) on Thursday barred Bollywood actor Arshad Hussain Warsi, his wife Maria Goretti Warsi and others from accessing the securities market for a period of one year, following their involvement in a coordinated 'pump and dump' scheme related to shares of Sadhna Broadcast Limited (SBL)..The regulator also barred 57 other entities and persons including Warsi's brother Iqbal Warsi from the market for periods ranging from one to five years.The order passed by SEBI Whole Time Member Ashwani Bhatia notes that Arshad Warsi, his brother Iqbal and Goretti were complicit in the market manipulation scheme orchestrated by the mastermind, Manish Mishra.“It is noted that Arshad Hussain Warsi in his statement recorded before SEBI on June 27, 2023, stated that apart from placing trades in his own account, he was also trading from the accounts of his wife (Noticee 61) and brother (Noticee 62).” the order noted. It further observed, “I note from the screenshot of Whatsapp Chat dated July 13, 2022 between Arshad Warsi and Manish Mishra that the orders placed on the said date from the account of Arshad Warsi for purchase of 3,29,050 shares, from the account of Noticee 61(Maria Warsi) for purchase of 3,29,755 shares, and from the account of Noticee 62 (Iqbal Warsi) for purchase of 82,625 shares of SBL, at Rs. 12.08 per share, were under the express instructions of Manish Mishra.” .In March 2023, SEBI had passed an interim order in the matter barring Warsi, his wife and several others from the securities market. However, the Securities Appellate Tribunal (SAT) later that month restricted the bar only to the scrip of SBL.SEBI's investigation covered the period from March 8, 2022 to November 30, 2022. The probe was initiated after complaints were received between July and September 2022 alleging stock price manipulation in Sadhna Broadcast shares, promoted by misleading YouTube videos and a large-scale paid marketing campaign.The company, listed on BSE since January 2018, is engaged in the television and film media business. During the investigation period, the number of public shareholders rose sharply from 885 to 72,509, while promoter shareholding fell from 40.95% to 25.58%..SEBI found that the manipulation scheme operated in two phases. First, coordinated trades among connected entities created artificial price and volume increases in the scrip. Second, promotional YouTube videos were uploaded, projecting the company as a turnaround story and making false claims such as acquisition by the Adani Group, possession of a 5G license and unrealistic price targets ranging from ₹76 to ₹340.These videos were uploaded through five YouTube channels run by one Manish Mishra and promoted using Google Ads. WhatsApp chats showed Mishra giving trade instructions and coordinating with Arshad Warsi and others.On July 13, 2022, trades from the accounts of Arshad Warsi (3,29,050 shares), Maria Goretti Warsi (3,29,755 shares), and Iqbal Hussain Warsi (82,625 shares) were executed at ₹12.08 per share under Mishra’s directions..SEBI noted that the Warsis’ trading activity was limited to stocks manipulated by Mishra. WhatsApp conversations showed discussions about receiving funds and executing buy orders. The regulator rejected the argument that they were inexperienced investors or unaware of the fraud, citing consistent trading patterns, fund transfers and chat records.The markets regulator found that the Warsis' violated several provisions of the SEBI Act, 1992, as well as Regulations 3 and 4 of of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) [PFUTP] Regulations, 2003. The unlawful gains were calculated at ₹41.70 lakh for Arshad Warsi, ₹50.35 lakh for Maria Goretti and ₹12.61 lakh for Iqbal Warsi.Mishra was held jointly and severally liable for both amounts, while Arshad Warsi was additionally liable for the gains in his wife’s account.The Warsis' have also been directed to disgorge their unlawful profits along with 12% simple interest per annum from November 30, 2022, and pay a monetary penalty of ₹5 lakh each within 45 days. The amounts are to be transferred to the Investor Protection and Education Fund..[Read Order]