Why has Sebi barred Arshad Warsi from the securities market for a year?

The crackdown on actor Arshad Warsi, his wife, and 57 others follows a probe into misleading YouTube videos promoting investments in Sadhna Broadcast Ltd (now Crystal Business System Ltd)

The Securities and Exchange Board of India (Sebi) on Thursday barred Bollywood actor Arshad Warsi, his wife Maria Goretti, and 57 other entities from the securities market for periods ranging from one to five years. The crackdown follows an investigation into misleading YouTube videos that recommended investing in shares of Sadhna Broadcast Ltd (now Crystal Business System Ltd).

  According to a Sebi order issued, both Warsi and Goretti were fined ₹5 lakh each and prohibited from participating in the securities market for one year, news agency PTI reported. 

Earlier in March 2023, Sebi took action against Warsi, his wife, and several others in a related case involving misleading YouTube videos promoting shares of Sadhna Broadcast Ltd. In the order, Sebi had directed the impounding of illegal gains amounting to ₹41.85 crore accrued by the entities involved in the pump-and-dump scheme. It also ordered all 31 individuals to open an escrow account with a scheduled commercial bank and deposit the impounded amount within 15 days.

 

Hefty penalties and disgorgement orders

On Thursday (May 29), Sebi imposed penalties ranging from ₹5 lakh to ₹5 crore on the 57 other individuals and entities involved, including key promoters of Sadhna Broadcast. The order also directed all 59 entities to jointly and severally disgorge illegal gains amounting to ₹58.01 crore, along with 12 per cent interest per annum, from the end of the investigation period until the payment is made.   

  Sebi’s findings revealed that Warsi and his wife earned illicit profits of ₹41.70 lakh, and ₹50.35 lakh, respectively.

 

Who are the masterminds behind the scheme?

In its detailed 109-page order, Sebi identified Gaurav Gupta, Rakesh Kumar Gupta, and Manish Mishra as the masterminds of the scheme. Subhash Aggarwal, who served as a director at the registrar and transfer agent of Sadhna Broadcast, acted as a liaison between Mishra and the company’s promoters. 

“These individuals were the central characters who planned and executed the manipulative scheme,” the regulator said.

 

How the scam was orchestrated

According to Sebi, Peeyush Agarwal, a dealer at Choice, and Lokesh Shah, owner of the Delhi franchise of a stockbroker, facilitated accounts for Manish Mishra and the promoters of Sadhna Broadcast to execute trades that manipulated the stock price.

Jatin Shah also played a significant role in operationalising the scheme, while other participants either enabled the manipulative activities or sought quick profits, the order said. 

Sebi noted that although some entities did not trade from their own accounts, they acted as information carriers or assisted in placing manipulative trades.

 

Two-phase pump-and-dump scheme

The regulator outlined a two-phase plan to manipulate the stock price: 

Phase 1: Connected and promoter-linked entities traded among themselves to steadily inflate the price of Sadhna Broadcast shares. Despite small trade volumes, the low liquidity of the scrip allowed these trades to disproportionately influence the price, creating an illusion of investor interest. 

Phase 2: Misleading and promotional videos were published on YouTube channels such as Moneywise, The Advisor, and Profit Yatra — all operated by Manish Mishra — to lure retail investors. These videos coincided with the artificial price surge and recommended SBL as a promising investment opportunity. 

Sebi concluded that the 59 entities had violated the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations.   

 

Additional actions and ongoing proceedings

Sebi clarified that Varun Media Pvt Ltd — a promoter entity — would not be fined due to ongoing insolvency proceedings, but the direction for disgorgement remains in place.  

The regulatory action follows complaints received between July and September 2022, alleging price manipulation and offloading of shares in Sadhna Broadcast. Investors flagged misleading YouTube videos that falsely promoted the company to lure unsuspecting buyers. 

Sebi subsequently launched a detailed investigation into trading activities in SBL’s shares between March 8, 2022, and November 30, 2022. The regulator had already issued an interim order on March 2, 2023, against 31 entities, including promoters of SBL.

 

[With PTI inputs]