Why SEBI barred actor Arshad Warsi and others from the securities market

What is the scam?

In its order, SEBI said that it received complaints, which alleged that “there was price manipulation and offloading of shares by certain entities in the scrip of television channel Sadhna Broadcast.” The complainants claimed that misleading YouTube videos with false content about the company were uploaded to lure investors. These YouTube videos peddled false and misleading news to recommend that investors should buy the Sadhna stock for extraordinary profits.

In its investigation, SEBI found that in July 2022,  false and misleading videos about Sadhna were uploaded on two YouTube channels — “The Advisor” and “Moneywise”, both owned and operated by Manish Mishra. It was claimed that Sadhna Broadcast Ltd is going to be taken over by the Adani group as well as that the company will soon move from TV production to movie production, with a big American corporation entering into a contract worth Rs 1,100 crore to produce four devotional movies under the label.

Subsequent to the release of the misleading YouTube videos, there was an increase in the price and trading volume of the Sadhna scrip. SEBI noted that “misuse of patently false and misleading YouTube videos, had led to drastic increase in the number of small shareholders (from 2,167 to 55,343 shareholders), who ended up buying shares from the noticee net sellers and volume creators at inflated price.”

During this time, when prices were inflated, certain promoter shareholders, key management personnel of Sadhna, and non-promoter shareholders offloaded a significant part of their holdings at inflated prices and booked massive profits.

SEBI held that prima facie, these actions are in direct contravention of SEBI regulations and the Prohibition of Fraudulent and Unfair Trade Practices Act.

What was Arshad Warsi’s role in this?

SEBI has classified these 31 entities into categories — creator of YouTube channels (Manish Mishra), net sellers/ promoters and profit makers (NSs)  i.e. persons who held shares of Sadhna at the start of the examination period and who traded in and net sold shares during the said period, Volume Creators (VCs), i.e. persons, outside of those classified as NSs, who both bought and sold shares of Sadhna during the said period, and information carriers (ICs).

Arshad Warsi and his wife, Maria Goretti, come in the category of Volume Creators, who both bought and sold shares of Sadhna during the examination period. Both of them contributed to a rise in trading volumes and interest in the scrip. Arshad made a profit of Rs 29.43 lakh and Maria gained Rs 37.58 lakh, the order showed.

What is Sadhna broadcast?

Sadhna Broadcast was incorporated in 1994. The group runs a number of media-related businesses with its flagship being the popular socio-religious TV channel Sadhna TV which broadcasts religious sermons and ceremonies from across the country to one’s television sets. When the channel was first launched in 2003, this was a novel idea, contributing to the company’s swift rise.

Apart from Sadhna TV, the company also runs TV channels across genres as well as an advertising and publication business. According to its website, it operates out of two offices, one in Jhandewalan, New Delhi, and one in Noida.

What have the reactions to this scam been?

Both the aforementioned YouTube channels — “The Advisor” and “Moneywise” — seem to have taken all of their content off YouTube. “The Advisor” has 840k subscribers whereas “Moneywise” has 767k subscribers.

Screenshot of the homepage of “Moneywise” YouTube channel. (Screenshot/YouTube)

Arshad Warsi put out a tweet claiming to be a victim of the stock manipulation. “Please do not believe everything you read in the news. Maria and my knowledge about stocks is zero, took advice and invested in Sharda (sic), and like many other, lost all our hard earned money.”

Please do not believe everything you read in the news. Maria and my knowledge about stocks is zero, took advice and invested in Sharda, and like many other, lost all our hard earned money.

— Arshad Warsi (@ArshadWarsi) March 2, 2023