SAT gives partial relief to Arshad Warsi, his wife in misleading YouTube video case

Sebi barred 31 entities including the couple and promoters of Sadhna Broadcast from markets for a 'pump & dump' scheme

The Securities Appellate Tribunal has set aside a Sebi order to ban actor Arshad Warsi and his wife Maria Goretti from the securities market with certain conditions in a case related to uploading misleading videos on YouTube, recommending investors to buy Sadhna Broadcast's shares.

Sebi, on March 2, barred 31 entities, including the couple and promoters of Sadhna Broadcast from the securities market for involving in an alleged "pump and dump" scheme, whereby through an orchestrated scheme, the entities through a coordinated involvement made illegal gains by way of the alleged fraudulent and manipulative scheme.

In addition, the regulator impounded illegal gains of Rs 41.85 crore made by these entities after misleading videos were uploaded on YouTube channels.

As per the Sebi order, Arshad Warsi made a profit of Rs 29.43 lakh and his wife earned a profit of Rs 37.56 lakh.

Also read | Sebi bans Sadhna Broadcast's promoters, actor Arshad Warsi, others from securities market

Following this, Arshad Warsi, his wife Maria Goretti and his brother Iqbal Hussain Warsi approached the Securities Appellate Tribunal (SAT) against the order passed by the Securities and Exchange Board of India (Sebi).

Setting aside a part of Sebi's order, the appellate tribunal noted that there is no evidence to show that the appellants (Warsis) were involved in the making, distribution, promotion and uploading of the videos on YouTube channels.

It further said there is nothing to indicate that the appellants by their conduct had created any interest in any investor to trade in the scrip of Sadhna. They have not spread any false and misleading information regarding the scrip in question.

"The only allegation against the appellants is that they are volume creators...In this regard, we find that the appellants had purchased the shares in July from another volume creator and had sold it to another volume creator...Thus, the appellants by selling the shares have made a profit was not at the expense of any unsuspecting gullible investor," SAT noted.

"At this stage, the impugned order is bereft of any evidence against the appellants requiring passing of such strong and harsh order. However, the balance of convenience is required to be considered at this stage," it added.

Accordingly, the SAT has set aside the directions issued against Warsis but restrained them from trading in the scrip of Sadhna during the pendency of the investigation.

SAT has asked them to deposit 50 per cent of the alleged unlawful gains in an escrow account with a scheduled commercial bank within 15 days. For the balance of 50 per cent of the amount, they would have to give an undertaking that they will deposit it within 30 days from the date of the final order.

In addition, the appellate tribunal has directed Sebi to complete the investigation within six months and initiate appropriate proceedings, if any, against the appellants.

The Sebi's order came after it received certain complaints wherein it was alleged that there was price manipulation and offloading of shares by certain entities in the scrip of the television channel Sadhna Broadcast.

The complaints alleged that misleading YouTube videos with false content about the company were uploaded to lure investors.

Following this, the regulator conducted an examination during April-September 2022 and found that spurt in the price and volume of scrip of Sadhna between April and mid-July 2022.