In a significant regulatory action, the Securities and Exchange Board of India (SEBI) has barred Bollywood actor Arshad Warsi, his wife Maria Goretti, and 57 other entities from participating in the securities markets for periods ranging from one to five years. The ban comes as a result of their alleged involvement in a “pump and dump” scheme related to the shares of Sadhana Broadcast Ltd (now Crystal Business System Ltd).
The market regulator’s detailed investigation, spanning from March 8, 2022, to November 30, 2022, uncovered a meticulously orchestrated scheme designed to artificially inflate the share price of Sadhana Broadcast. The modus operandi involved two coordinated phases.
In the initial phase, connected and promoter-linked entities engaged in self-trades and manipulative trading practices to steadily drive up the stock’s price, creating a false impression of robust market interest. These trades, though sometimes small in volume, had a disproportionate impact due to the scrip’s low liquidity, allowing the perpetrators to push prices upward with relatively minimal capital outlay.
The second phase witnessed the dissemination of misleading and promotional videos across various YouTube channels, including “Moneywise,” “The Advisor,” and “Profit Yatra,” all operated by one Manish Mishra. These videos, which were reportedly part of a paid marketing campaign, presented Sadhana Broadcast as a highly promising investment opportunity, touting false claims such as an impending takeover by the Adani group, a shift from TV production to movie production with a substantial American investment, and even inflated financial projections. These deceptive videos were strategically timed to coincide with and amplify the artificial market activity generated in the first phase.
SEBI’s probe revealed that a significant number of unsuspecting retail investors were lured by these misleading videos, leading to a drastic increase in the number of small shareholders (from 2,167 to 55,343 shareholders) who ended up buying shares at inflated prices. Meanwhile, certain promoter shareholders, key management personnel of Sadhana Broadcast, and non-promoter shareholders offloaded a substantial portion of their holdings at these artificially inflated prices, booking significant unlawful gains. The total illicit gains identified by SEBI from these entities amount to ₹58.01 crore, which they have been directed to disgorge along with 12% interest per annum.
Actor Arshad Warsi and his wife, Maria Goretti, were categorized by SEBI as “volume creators,” meaning they contributed to the rise in trading volumes and interest in the scrip by buying and selling shares during the manipulation period. SEBI noted that Arshad Warsi made a profit of ₹41.70 lakh and his wife earned a profit of ₹50.35 lakh from this scheme. The regulator also imposed a fine of ₹5 lakh each on them.
The final order identifies Gaurav Gupta, Rakesh Kumar Gupta, and Manish Mishra as the masterminds behind this elaborate operation. Penalties ranging from ₹5 lakh to ₹5 crore have been levied on the 57 other entities involved, including the promoters of Sadhana Broadcast.
This stern action by SEBI underscores its commitment to curbing market manipulation and safeguarding investor interests. The regulator has also urged social media platforms to assume greater responsibility for financial content hosted and promoted on their platforms, highlighting the need to prevent their algorithms and monetization models from inadvertently amplifying manipulative practices that could lead to substantial losses for retail investors. A separate order concerning the company, Sadhana Broadcast (now Crystal Business System Ltd), is expected to be issued by SEBI in due course.