Market regulator Securities and Exchange Board of India (SEBI) has barred actor Arshad Warsi, along with his wife, and his brother from accessing the securities market for one year for allegedly artificially inflating the share price of Sadhna Broadcast Ltd (SBL) before dumping it. SEBI passed a final order in the matter of Sadhna Broadcast Limited. Company has now changed its name to Crystal Business System Ltd.
SEBI has also imposed monetary penalty of Rs 5 lakh each on these individuals. SEBI has further ordered disgorgement of Rs 1.05 crore collectively from them.
SEBI has alleged that Warsi and others colluded with an individual named Manish Mishra who was allegedly involved in creating a false positive narrative about SBL and luring investors to buy the shares of the company. SEBI found chats between Mishra and Warsi.
SEBI alleged that Warsi was aware that Mishra was carrying out structured trades in the scrip. However, Warsi, his wife and brother have claimed that they are new to the stock market and are not aware about its nuances. They submitted that they have been victims of the alleged fraud perpetrated by Mishra and have incurred substantial loss on account of the trades directed by him.
SEBI in its final order said that Arshad Warsi in his statement recorded before SEBI on June 27, 2023, stated that apart from placing trades in his own account, he was also trading from the accounts of his wife and brother. SEBI order said, “It is noted from the WhatsApp chats between Manish Mishra and Arshad Warsi that Manish Mishra was proposing to transfer Rs 25 lakhs each in the bank accounts of Arshad Warsi, his wife and his brother.”
In total, SEBI has banned seven persons from accessing the market for 5 years, and 54 people have been barred for a year.
SEBI alleged that pump and dump was going in the shares of SBL. SEBI found that a coordinated scheme involving misleading YouTube videos and structured trading was going on to pump the share price. And then the promoters of the company offloaded their stakes to retail investors.
SEBI order says that false content on YouTube, and a paid marketing campaign was devised and used to attract investors. SEBI investigation period was from March 8, 2022, to November 30, 2022. SEBI had received a complaint that YouTube videos were being uploaded with false content to lure investors and a paid marketing campaign worth crores was undertaken to make the videos reach a wider audience. The complainant also provided links to YouTube videos, names of YouTube channels and dates when the videos were uploaded. SEBI had passed interim order in the same case in March 2023.
SEBI has alleged that Mishra, along with associates Dipak Dwivedi and Vivek Chauhan, created and promoted misleading YouTube videos to manipulate the share price of SBL. They promoted false information about the company.
SEBI has identified 5 YouTube channels — The Advisor, Midcap Calls, Profit Yatra, Moneywise, and India Bullish.
SEBI alleged that these channels created false claims about SBL’s financial health and future prospects. The investigation revealed that Manish Mishra was the administrator of multiple YouTube channels involved in the promotion of SBL. Significant trading activity was observed among connected entities, with 45 percent of total volume attributed to structured trades. SEBI found there was a collusion.
SEBI alleged the involvement of the promoters of the SBL in the stock manipulation. SEBI found WhatsApp messages between Manish Mishra, Subhash Agarwal, and the promoters of SBL. Promoters used to trade immediately after release of YouTube Videos by associates of Manish Mishra.
SEBI found that the biggest beneficiary of the scheme was Gaurav Gupta, who earned Rs 18.33 crore, and Sadhna Bio Oils Pvt. Ltd earned Rs 9.41 crore. SEBI has ordered for the disgorgement of the illicit gains made by the individuals and entities.
SEBI has imposed a penalty of Rs 5 crore on Manish Mishra, Rs 2 crore each on Gaurav Gupta, Rakesh Kumar Gupta, Subhash Agarwal, Piyush Agarwal and Lokesh Shah. A penalty of Rs 1 crore has been imposed on Jatin Manubhai Shah.
An IPS officer involved in stock manipulation in the same matter had settled the case with SEBI.
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