Business News/ Markets / Stock Markets/  Warsi gets relief in securities case

MUMBAI : The Securities Appellate Tribunal (SAT) granted an interim relief to actor Arshad Warsi and wife Maria Goretti in a matter pertaining to a pump-and-dump scam. SAT has set aside a Securities and Exchange Board of India (Sebi) order of 2 March, but with certain conditions.

In its investigation, Sebi had found that the duo, along with 29 others, was involved in giving stock tips through social media platforms, and issued an ex-parte order directing all the entities from buying, selling or dealing in securities directly or indirectly. Aggrieved by the order, Warsi moved the SAT on 17 March seeking relief.

In its order on Monday, SAT said Warsi and Goretti will be restrained from trading in the stock of Sadhna Broadcast till the investigation is on. “The appellants shall deposit 50% of the alleged unlawful gains in an escrow account within 15 days. For the balance amount, the appellants shall provide an undertaking that they will deposit it within 30 days from the date of the final order, if any, passed by the whole-time member," said Justice Tarun Agarwala.

It also directed Sebi to complete its investigation within six months and initiate appropriate proceedings against the appellants. In case the investigation is incomplete and proceedings are not initiated, the parties may appeal for a modification in the order.

The Sebi order is a first of its kind against any social media influencer. Warsi allegedly gained 29.43 lakh, while his wife made 37.56 lakh. Pump-and-dump schemes are rampant on social media platforms like Youtube, Facebook, Telegram and Whatsapp, wherein the perpetrators entice investors into buying a company stock to inflate the price artificially and then sell their shares when the prices rise.

Warsi and Goretti were found to be as the “volume creators" (VCs), wherein the duo bought and sold shares of Sadhna during the examination period April 2022 –July 2022, hence contributing to a rise in trading volumes and interest in the scrip.

According to the order Sebi received certain complaints wherein it was alleged that there was price manipulation and offloading of shares by certain entities in the scrip of Sharpline Broadcast.

The said complaints alleged that YouTube videos with false content, backed by paid marketing campaign worth crores of rupees for additional reach, were being uploaded to lure investors. Once these unsuspecting investors entered the scrip, the said entities offloaded their holding at an inflated price.

Based on the order, the regulator found that in the second half of July 2022, false and misleading videos about the company were uploaded on two YouTube channels namely-- “The Advisor" and “Moneywise". These YouTube videos peddled false and misleading news to recommend that investors should buy the Sadhna stock for extraordinary profits.

The regulator through the videos found recommendations that stated that the company (Sadhna Broadcast) has 5G license. It is going to be taken over by Adani group. The margins of the company will increase after the deal.

BSE sought clarification from the company with reference to the information being circulated on social media. The company, however, refuted the claims.

These YouTube Channels had lakhs of subscribers and the misleading YouTube videos had crores of viewership aided by promotion through paid advertising campaigns. Subsequently, the misleading YouTube videos ceased to be available for public viewing.

The YouTube videos subsequently appear to have been disabled for public viewing on the said YouTube Channels. However, the said videos, as downloaded, are available on Sebi’s record.

In March, The Securities and Exchange Board of India (Sebi) issued two interim ex-parte orders impounding unlawful gains and barring 31 entities from the securities market in connection with pump-and-dump schemes in Sharpline Broadcast and Sadhna Broadcast shares.

Priyanka Gawande
Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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Updated: 28 Mar 2023, 12:09 AM IST
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