File picture of actor Arshad Warsi and his wife Maria Goretti

Securities and Exchange Board of India (SEBI) banned actor Arshad Warsi among others from accessing the securities market for up to five years for engaging ina  pump and dump scheme.

SEBI found 64 entities among which Mr. Warsi and his family members were a part and accordingly show cause notices (SCN)  were sent to them. 

“The SCN recorded that the price and volume of the scrip of SBL (Sadhna Broadcast Limited) was manipulated through a coordinated scheme involving the dissemination of misleading information and structured trading among connected entities. The scheme, the SCN alleged, was planned and executed by certain members of the promoter group of SBL in collusion with other individuals and entities, with the objective of artificially inflating the price of the scrip and offloading shares to unsuspecting investors at elevated prices,” said Ashwani Bhatia, Whole Time Member in his order. 

SEBI found that Mr.Warsi, his spouse, his brother and his manager had traded in the scrip of SBL, in the advice of a Manish Mishra among others, who manipulated the stocks of SBL, VCU Data managements and Banas Finance and was pivotal in starting a Youtube channel where he disseminated false information regarding the companies. The promoters of SBL first traded amongst themselves to inflate the price and then later promoted the low liquidity stock on social media. 

“The overall conduct of the Noticees has revealed a classic pump-and-dump scheme. 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. The retail investors, misled by this staged market activity, were left holding the shares at distorted valuations once the manipulators that included the promoters had exited,” the order read. 

Accordingly, Mr.Warsi, his spouse, his brother and his manager among others were slapped a penalty of ₹5 lakh each and an interest of 12% per annum over that. They were banned from accessing the securities market for a year. The entities who executed the structured trades including Gaurav Gupta, among six others are banned from securities market for five years and slapped penalties up to ₹2 crore, the order read. 

All the notices were directed to disgorge their respective amounts within 45 days from the receipt od the order