Arshad Warsi, wife Maria Goretti get relief from SAT against Sebi ban

The Securities and Appellate Tribunal (SAT) on Monday granted interim relief to Arshad Warsi and wife Maria Goretti Warsi in the matter pertaining to their alleged involvement in stock manipulation of Sadhna Broadcast through YouTube.

The tribunal, however, ordered the three appellants — the couple and Warsi’s brother Iqbal Hussain Warsi — to deposit 50 per cent of the alleged unlawful gains in an escrow account.

Setting aside the Securities and Exchange Board of India’s (Sebi’s) order to debar them from the securities market, SAT has restrained the appellants only from dealing in the scrip of Sadhna during the pendency of the investigations.

“Investigations are still going on and the possibility of the appellants being involved in the manipulative scheme cannot be ruled out. However, at this stage, the impugned order is bereft of any evidence against the appellants requiring passing of such strong and harsh order,” SAT said.

The tribunal directed the markets regulator to complete its investigation in the matter within six months and initiate appropriate proceedings.

Sebi, in an ex-parte order dated March 2, had imposed a ban on 31 players from trading in the securities market and ordered disgorgement of the unlawful gains.

In its order, Sebi had directed the Warsis to deposit Rs 76.33 lakh, which has now been reduced by SAT to Rs 38.16 lakh.

For the remaining amount, they will have to submit an undertaking that they will deposit the balance amount within 30 days from the date of final order issued by the market watchdog.

The SAT bench, presided by Justice Tarun Agarwala, said that the profit made by selling the shares was not at the expense of any unsuspecting gullible investor. They further noted that the couple did not spread any false and misleading information regarding Sadhna Broadcast nor did their conduct create an investor interest in the scrip.

Taking a harsh note on the ad-interim order, SAT said, “We are of the considered view that the WTM has passed the order in haste and without considering the essential facts. In so far as the appellants are concerned, there is no iota of evidence against the appellants to show that they were engaged in a coordinated scheme to induce unsuspecting investors to acquire securities in the scrip in question.”

Sebi had named the Warsi couple as “volume creators” in an alleged ‘pump and dump’ scheme by use of YouTube channels, which published misleading videos with false contents to lure unsuspecting investors to trade in the scrip of Sadhna. However, the tribunal has noted that Warsi bought the shares on one occasion and then sold it, thus it does not make him a volume creator.

Warsis were represented in the SAT by Amit Agrawal and Sumit Agrawal of Regstreet Law Advisors.