Actor Arshad Warsi and 44 others, including his wife Maria Goretti, have been banned from from the securities market for one year, in cases related to manipulating the share prices of two companies through uploading misleading videos on YouTube channels. Sebi has barred them from market through its order after a probe in the matters under the PFUTP Regulations 2003 of the SEBI Act, 1922. Here’s all you need to know about the case:
These share pump-and-dump cases are related to the shares of two companies — Sadhna Broadcast Ltd and Sharpline Broadcast Ltd. According to complaints, misleading videos were uploaded on YouTube channels recommending investors to buy the shares of the two companies, to lure investors.
After the complaints, markets regulator Sebi conducted an examination during April-September 2022 and found out the spurt in the price and volume of scrip of the two companies between April and mid-July 2022.
In the second half of July 2022, false and misleading videos about Sadhna were uploaded on two YouTube channels — The Advisor and Moneywise.
In the second half of May 2022, similar videos about Sharpline were also uploaded on two YouTube channels — Midcap calls and Profit Yatra.
According to Sebi interim orders, these YouTube videos peddled false and misleading news to recommend that investors should buy shares of Sadhna and Sharpline for extraordinary profits.
After the misleading YouTube videos were released, there was an increase in the price and trading volume of the scrip of two firms. The volumes appear to have been contributed by a large number of retail investors likely influenced by the misleading YouTube videos.
During this period, certain promoter shareholders, key management personnel of Sadhna, and non-promoter shareholders offloaded a significant part of their holdings at inflated prices and booked profits.
How Were The YouTube Videos Misleading?
One of the misleading videos on these YouTube channels was that Sadhna Broadcast Ltd is going to be taken over by Adani group and after the deal, the margins of the company will increase.
In addition, there were other videos like the company is moving from TV production to movie production and a big American corporation has entered into a contract for Rs 1,100 crore to produce four devotional movies where the money will be brought in by the American investor but the rights will remain with Sadhna and in one of the videos, apparently a pic of industrialist Gautam Adani can be seen.
The Sebi Action
Apart from Arshad Warsi and his wife, some of the promoters of Sadhna Broadcast have been restrained from the securities market for their involvement.
In addition to market ban, Sebi has impounded illegal gains to the tune of Rs 54 crore made by the entities after misleading videos were uploaded on YouTube channels, according to two separate interim orders.
In the case of Sadhna Broadcast, Sebi noted that Arshad Warsi has made a profit of Rs 29.43 lakh and his wife has earned profit of Rs 37.56 lakh. Also, Iqbal Hussain Warsi has gained Rs 9.34 lakh. These three among others have been classified as volume creators by the capital markets regulator.
The two orders came after the Securities and Exchange Board of India (Sebi) received certain complaints wherein it was alleged that there was price manipulation and offloading of shares by certain entities in the scrip of television channel Sadhna Broadcast and New Delhi-based Sharpline Broadcast.
Sebi has classified these entities into categories like — creator of YouTube channels (Manish Mishra), net sellers/ promoters and profit makers (NSs), volume creators (VCs) and information carriers (ICs).
Sebi noted, prima facie, these entities collectively helped create trading volumes and interest in the scrip, spread false and misleading YouTube videos, and hence induced investors to buy the companies scrips at elevated prices, thereby prima facie violating the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules.
In the case of Sadhna, Sebi said that elaborate modus operandi adopted by the entities noticees including the egregious misuse of patently false and misleading YouTube videos, had led to drastic increase in the number of small shareholders — from 2,167 to 55,343 shareholders who ended up buying shares from the noticee net sellers and volume creators at inflated price, while small shareholders number shot up from 517 to 20,009 in the case of Sharpline.
What Arshad Warsi Said
Arshad Warsi in a tweet said, “Please do not believe everything you read in the news. Maria and my knowledge about stocks is zero, took advice and invested in Sharda, and like many other, lost all our hard earned money.”
(With Inputs from PTI)
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