On 2-3-2023, the Securities and Exchange Board of India (‘SEBI’) restrained the promoters of Sadhna Enterprises including Arshad Warsi along with other 29 entities from buying, selling or dealing in the securities market for violating the provisions of the SEBI Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2022 (‘PFUTP Regulations’) for luring the investors by uploading misleading videos on YouTube.
Facts:
SEBI received complaints wherein it was alleged that there was price manipulation and offloading of shares by entities in the scrip of television channel Sadhna Broadcast.
It was alleged that misleading YouTube videos with false content, backed by paid marketing campaign worth crores of rupees for additional reach, were being uploaded to lure investors. Once these unsuspecting investors entered the scrip, the said entities allegedly offloaded their holding at an inflated price.
The two YouTube channels on which the misleading videos were uploaded were “The Advisor” and “Moneywise”.
The alleged profits made after the videos were uploaded were computed and recorded. According to which Arshad Warsi gained Rs. 29.43 lakh and his wife made a profit of Rs. 37.56 lakh.
Violations:
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According to Section 12-A of the SEBI Act, 1992, no person should manipulate/ deceive/ fraud any person in connection with issue/ dealing in securities, in contravention of the provisions of the Act.
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According to Section 3 of PFUTP Regulations, 2022, no person should buy/ sell/ deal in securities in fraudulent manner.
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Regulation 4 of PFUTP Regulations, 2022 prohibits manipulative, fraudulent and unfair trade practices.
Observations & Analysis:
SEBI observed that the videos contained false and deceptive statements about the growth story and future prospects of the company. The videos recommended investors to buy the scrip to earn substantial profits.
It was also observed that all of the Noticees participated in the perpetration of the alleged fraudulent scheme.
SEBI noted that “Fraudulent and manipulative practices distort fair price discovery thereby defeating one of the basic purposes of an organized securities market”.
Order:
SEBI restrained the noticees from buying, selling or dealing in securities either directly or indirectly, in any manner whatsoever until further orders.
Further, SEBI directed that the proceeds in the bank accounts of the Noticees to be impounded to the extent of their liability. SEBI directed the Noticees to open an escrow account with a Scheduled Commercial Bank and deposit the impounded amount mentioned therein within 15 days from the date of service of this Order.
SEBI directed the banks where Noticees are holding bank accounts, to ensure that no debits are made in the said bank accounts without the permission of SEBI.
SEBI further directed All the Noticees not to dispose of or alienate any assets, whether movable or immovable, or create any interest or charge on any of such assets held in their name, jointly or severally, including money lying in bank accounts except with the prior permission of SEBI until the impounded amount is deposited in the escrow account.
[Sadhna Broadcast Limited, In Re, WTM/AN/ISD/ISD-SEC-1/24333/2022-23, dated 2-3-2023.]
