Sebi bars promoters, manipulators in Sadhna Broadcast pump and dump matter

Retail investors misled via YouTube videos in Sadhna Broadcast case as Sebi bans 59 individuals including actor Arshad Warsi and imposes Rs 20 crore in penalties

The Securities and Exchange Board of India (Sebi) on Thursday imposed total penalties of around Rs 20 crore on 59 individuals for alleged manipulation and fraudulent practices in the shares of Sadhna Broadcast—renamed Crystal Business System as of 23 May.

 

The case pertains to a classic pump and dump scheme that misled investors via promotional videos on YouTube channels such as Moneywise, The Advisor, and ProfitYatra, operated by one Manish Mishra. These videos presented Sadhna Broadcast as a promising investment, timed to boost artificial market activity.

 

Sebi has debarred seven individuals from the securities market for five years, and 52 others—including actor Arshad Warsi—have been barred for one year. The individuals played various roles in executing the pump and dump strategy.

 

A penalty of Rs 5 crore was imposed on Mishra, while five others, including members of the promoter group, were fined Rs 2 crore each. Arshad Warsi, his wife, and his brother have each been penalised Rs 5 lakh for executing trades on Mishra’s instructions and helping generate trading volumes in the stock.

 

Sebi’s order noted that retail investors were lured in by a misleading perception of demand, effectively providing exit liquidity for the promoters. While the number of retail shareholders surged during the period, the stock price plummeted from a peak of Rs 33 at the time of the pump to Rs 2.73 on Thursday. 

 

The promoters of Sadhna Broadcast, according to Sebi, entered into a scheme with market operators to offload their own shares. The promoter holding declined from 40.95 per cent in March 2022 to 25.58 per cent in December 2022.

 

“This Order serves as a message that such manipulative practices by interested parties will be met with appropriate action. Investors are urged to exercise due diligence and caution, especially while investing in companies which see sudden spikes in prices without any attributable change in fundamentals,” said Sebi whole-time member Ashwani Bhatia in the order.

 

The regulator also urged social media platforms to take greater responsibility for the content they host and promote, particularly when it relates to financial markets.

 

“Their algorithms and monetisation models must not end up amplifying manipulation resulting in retail investors losing huge sums of money,” Bhatia added.

 

Sebi said a separate order concerning the company will be issued in due course.