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Business News/ News / India/  Pump-and-dump lands Arshad Warsi, wife, others in Sebi net

Pump-and-dump lands Arshad Warsi, wife, others in Sebi net

Arshad Warsi and wife Maria Goretti were found to be volume creators for shares of Sadhna during Aprill-July 2022.

Sebi said it got complaints about manipulation of prices by certain entities in the scrip of Sharpline Broadcast. Mint Premium
Sebi said it got complaints about manipulation of prices by certain entities in the scrip of Sharpline Broadcast. Mint

Mumbai: The Securities and Exchange Board of India (Sebi) on Thursday barred several social media influencers from the securities market and impounded their unlawful gains, in connection with pump-and-dump schemes in shares of Sharpline Broadcast and Sadhna Broadcast.

Arshad Warsi and his wife Maria Goretti Warsi profited 29.43 lakh and 37.56 lakh respectively from the scheme, Sebi said. Besides the Warsis, Sebi’s two interim ex-parte orders also restrained another 29 individuals from buying, selling or dealing in securities either directly or indirectly until further orders.

Pump-and-dump schemes, rampant across Youtube, Facebook, Telegram, and Whatsapp, refer to the practice of encouraging investors to buy shares in a company to inflate their prices artificially, and then selling one’s own shares while the prices are high.

Warsi and Goretti were found to be the “volume creators" (VCs), buying and selling shares of Sadhna during April-July 2022, contributing to a rise in trading volumes and interest in the scrip.

Sebi said it received certain complaints alleging price manipulation and offloading of shares by certain entities in the scrip of Sharpline Broadcast.

The 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 unsuspecting investors entered the scrip, the said entities offloaded their holdings at a high price.

Sebi found that in the second half of July 2022, false and misleading videos about the company were uploaded on two YouTube channels: The Advisor and Moneywise, peddling false and misleading news to recommend that investors should buy the Sadhna stock for extraordinary profits.

The regulator found recommendations in the videos that stated that the company (Sadhna Broadcast) has a 5G licence and would 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 channels had lakhs of subscribers and the misleading videos had millions of viewers, aided by paid advertising campaigns. Subsequently, the misleading YouTube videos ceased to be available for public viewing. However, the videos are in Sebi records.

Nithin Kamath, founder and CEO of Zerodha on Twitter said, “Sebi is killing it with these enforcement orders. These elaborate orders should hopefully put some fear amongst unauthorized portfolio management services. Such actors damage the sanctity of capital markets in India."

“The pump-and-dump schemes are peddled by selling greed and unrealistic returns through social media and YouTube should serve as a powerful deterrent. These scams had become the easiest games in town for manipulators," Kamath said.

He added that his firm Zerodha shows a nudge asking users to be careful when they spot cases of pump-and-dump. In such cases, a notification by Zerodha says, “These are buy/sell tips being circulated on social media to possibly manipulate the price of scrip. Exercise caution before buying".“In the last three years of nudges, potential scammy stock trading volumes as a percentage of overall equity volumes are down by 90% at Zerodha," Kamath added.

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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: 03 Mar 2023, 12:31 AM IST
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