Pump & dump: Sebi bans actor Warsi, wife

MUMBAI: Sebi on Friday banned 59 entities, including actor Arshad Warsi, his wife Maria Goretti, from the market for up to 5 years. The move is related to misleading videos on YouTube channels - like Moneywise, The Advisor and Profit Yatra - luring investors to buy TV channel Sadhna Broadcast's shares. The markets regulator fined the couple Rs 10 lakh, and they will have to disgorge illegal gains worth Rs 92 lakh from the stock price manipulation.

Warsi and his wife Goretti played a role in promoting the stock of Sadhna (now Crystal Business System) through videos on YouTube, which were uploaded by one of the masterminds of the scheme.

In its 109-page order, Sebi whole-time member Ashwani Bhatia stated that the way the whole incident played out painted "a disturbing picture regarding the increasing use of social media platforms, which have immense reach and influence in the digital age, as tools for market manipulation". Sebi ordered disgorgement of illegal gains totalling about Rs 58 crore and imposed fines of up to Rs 5 crore on the entities. The overall conduct of the people involved in the scheme revealed a classic pump-and-dump scheme, the report said.

"The price was systematically pushed upward through collusive trading, followed by aggressive promotional activity to draw in retail investors, and finally, a coordinated sell-off by the promoters. Retail investors, misled by this staged market activity, were left holding the shares at distorted valuations once the manipulators, including the promoters, exited," the report said.

Sebi found that three individuals, Gaurav Gupta, Rakesh Kumar Gupta, and Manish Mishra, were the masterminds. Subhash Aggarwal, a director with Skyline Financial Services, the registrar & transfer agent of Sadhna Broadcast, was the middleman. These individuals "were the central characters who planned and executed the manipulative scheme", Sebi said.

Modus Operandi: First, the entities executed trades among themselves to steadily inflate the price of the scrip and create a false appearance of market interest. Second, misleading promotional videos were disseminated across YouTube channels operated by Manish Mishra.