The Securities and Exchange Board of India (SEBI) has barred actor Arshad Warsi and several others from accessing the securities market for up to five years for their involvement in a “pump-and-dump scheme” involving Sadhna Broadcast Limited (SBL).
Key Findings of SEBI’s Investigation
- SEBI identified 64 entities, including Warsi, his wife, brother, and manager, who traded in SBL shares based on advice from Manish Mishra, a key manipulator.
- Mishra was found to have manipulated stocks of SBL, VCU Data Management, and Banas Finance and ran a YouTube channel spreading false information about these companies.
- The promoters of SBL first traded among themselves to artificially inflate the stock price, then promoted the low-liquidity stock on social media to lure retail investors.
- Once the price surged, the promoters sold their shares at inflated prices, leaving retail investors with overvalued stocks.
SEBI’s Order & Penalties
Arshad Warsi, his wife, brother, and manager were fined ₹5 lakh each with 12% annual interest and banned from the securities market for one year.
Gaurav Gupta and six others, who executed structured trades, face five-year market bans and penalties of up to ₹2 crore.
All parties must disgorge (return) their unlawful gains within 45 days of the order.
SEBI’s Observations
The regulator stated that this was a classic pump-and-dump scheme:
“The price was systematically inflated through collusive trading, followed by aggressive promotions to attract retail investors. Once the manipulators exited, unsuspecting investors were left with overvalued shares.” This action highlights SEBI’s crackdown on market manipulation and insider trading, ensuring investor protection and market integrity.