Arshad Warsi is known for movies like Jolly LLB and Munna Bhai MBBS.
Popular Bollywood actor Arshad Warsi and his wife Maria Goretti, are among 45 individuals and companies banned by the Securities and Exchange Board of India (SEBI) from participating in the securities market, officials said on Thursday. The decision comes after an investigation into allegations of share price manipulation by certain entities of two companies, Sharpline Broadcast Ltd and Sadhna Broadcast Ltd, through uploading misleading videos on YouTube channels.
SEBI found that certain individuals uploaded false and misleading videos recommending investors buy shares of Sadhna Broadcast Ltd and Sharpline Broadcast Ltd for extraordinary profits. In addition to Arshad Warsi and Maria Goretti, some promoters of Sadhna Broadcast Ltd have also been restrained from participating in the securities market.
Along with the ban, SEBI has impounded illegal gains worth Rs 54 crore made by the entities after misleading videos were uploaded on YouTube channels. Two separate interim orders detail the investigation's findings.
According to the interim order, Arshad Warsi made a profit of Rs 29.43 lakh, Maria Goretti earned a profit of Rs 37.56 lakh, and Iqbal Hussain Warsi made a gain of Rs 9.34 lakh. These three individuals, among others, have been classified as volume creators by SEBI.
The investigation began after SEBI received complaints alleging that certain entities were engaging in price manipulation and offloading shares of Sadhna Broadcast Ltd and Sharpline Broadcast Ltd. The complaints alleged that misleading videos with false content about the two companies were uploaded to lure investors.
SEBI conducted an examination from April-September 2022 and found that there was a significant increase in the price and volume of shares of the two companies between April and mid-July 2022. False and misleading videos about Sadhna Broadcast Ltd were uploaded on two YouTube channels, The Advisor and Moneywise, during the second half of July 2022. Similarly, similar videos about Sharpline Broadcast Ltd were uploaded on two YouTube channels, Midcap calls and Profit Yatra, in the second half of May 2022.
SEBI classified the entities into categories such as creators of YouTube channels, net sellers/promoters and profit makers, volume creators, and information carriers. According to SEBI, these entities collectively helped create trading volumes and interest in the shares, spread false and misleading YouTube videos, and induced investors to buy the shares at inflated prices, thereby violating the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules. Collectively, net sellers/promoters and some of the volume creators made extraordinary profits as a result of this scheme.
In the case of Sadhna Broadcast Ltd, SEBI found that the elaborate modus operandi adopted by the entities, including the egregious misuse of patently false and misleading YouTube videos, had led to a drastic increase in the number of small shareholders, from 2,167 to 55,343, who ended up buying shares at an inflated price. The number of small shareholders increased from 517 to 20,009 in the case of Sharpline Broadcast Ltd.
SEBI has barred the 45 entities "from buying, selling, or dealing in securities either directly or indirectly, in any manner whatsoever until further orders." Additionally, the entities have been directed not to dispose of any assets, including money in bank accounts, without prior permission from SEBI until the impounded amount is deposited in the escrow account.