Actor Arshad Warsi and his wife Maria Goretti are among 31 entities who have been barred from the securities market in a case relating to misleading videos posted on YouTube channels recommending that investors buy shares in Sadhna Broadcast. Sadhna Broadcast, a company which runs several media-related businesses along with its flagship socio-religious channel Sadhna TV, has been accused of price manipulation.
Issuing the ban on Thursday, March 2, the Securities and Exchange Board of India (SEBI) seized illegal gains amounting to Rs 41.85 crore made by the entities involved in the “pump and dump” scam, and directed all 31 individuals to open an escrow account with a scheduled commercial bank and deposit the seized amount within 15 days. According to SEBI, Arshad earned a profit of Rs 29.43 lakh while Maria made Rs 37.56 lakh from the scheme.
Pump-and-dump schemes refer to the practice of artificially inflating share prices by encouraging investors to purchase shares in a company and then selling one’s own shares when the prices are high.
SEBI, in its order, stated that it received complaints that alleged that “there was price manipulation and offloading of shares by certain entities in the scrip of television channel Sadhna Broadcast.” Misleading YouTube videos with false content about the company were uploaded to entice investors, the complainants alleged, adding that these videos propagated false news to recommend that investors should buy the Sadhna stock for substantial profits.
SEBI found that misleading videos about Sadhna Broadcast were uploaded on two YouTube channels, The Advisor and Moneywise, in July 2022, which recommended that investors buy the Sadhna stock for extraordinary profits. The videos claimed that the company had a 5G licence and would be taken over by the Adani group, and that the margins of the company would increase after the deal, as per a report in LiveMint.
Following the release of the misleading YouTube videos, there was a dramatic increase in the price and trading volume of the Sadhna scrip. SEBI noted that “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,” according to a report in the Indian Express.
During this time, when prices were inflated, some promoter shareholders, key management personnel of Sadhna, and non-promoter shareholders offloaded a significant part of their holdings at inflated prices and earned enormous profits, the IE report added. SEBI held that prima facie, these actions are in direct contravention of SEBI regulations and the Prohibition of Fraudulent and Unfair Trade Practices Act.
Arshad and Maria were found to be “volume creators” (VCs) who contributed to an increase in trading volumes and interest in the scrip by buying and selling shares of Sadhna Broadcast during April-July 2022, the LiveMint report stated.
Denying the allegations against him and his wife, Arshad claimed ignorance about the stock market. “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 others, lost all our hard earned money,” (sic) he wrote.
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.
— Arshad Warsi (@ArshadWarsi) March 2, 2023