SEBI bans actor Arshad Warsi, wife and 57 others for up to 5 years

The Securities and Exchange Board of India (SEBI) on Thursday barred Bollywood actor Arshad Warsi, his wife Maria Goretti, and 57 other individuals and entities from the securities markets for periods ranging from one to five years. The action is part of SEBI's final order in a case involving alleged manipulation of the share price of Sadhana Broadcast Ltd (now Crystal Business System Ltd) through coordinated trades and misleading investment videos.

According to SEBI, Arshad Warsi earned a profit of ₹41.70 lakh, while Maria Goretti made ₹50.35 lakh from the trades. Both have been fined ₹5 lakh each. The market regulator also imposed monetary penalties ranging from ₹5 lakh to ₹5 crore on 57 other noticees, which included the company’s promoters and associates. SEBI further directed all the involved entities to disgorge a total of ₹58.01 crore in unlawful gains along with 12% interest per annum from the end of the investigation period till the actual date of payment.

SEBI's 109-page order named Gaurav Gupta, Rakesh Kumar Gupta, and Manish Mishra as the key masterminds of the scheme. Subhash Aggarwal, a director of the Registrar and Transfer Agent (RTA) of Sadhana Broadcast Ltd, was identified as the person who coordinated between Manish Mishra and the promoters of the company. The order also mentioned Peeyush Agarwal and Lokesh Shah as individuals who facilitated accounts that were used for executing manipulative trades.

The regulator stated that the scheme was executed in two phases. In the first phase, connected and promoter-linked entities conducted trades among themselves to inflate the price of Sadhana Broadcast shares by creating an artificial appearance of market activity. The trades were often small in volume but had a significant impact due to the stock’s low liquidity. In the second phase, misleading promotional videos recommending the stock were released on various YouTube channels. These videos portrayed the stock as a high-potential investment opportunity.

The investigation was initiated after SEBI received complaints between July and September 2022 about price manipulation and share offloading in Sadhana Broadcast. The complaints also alleged the use of paid marketing campaigns to spread false promotional content. SEBI had issued an interim order on March 2, 2023, against 31 entities. The final investigation covered trading activities between March 8, 2022, and November 30, 2022.