SEBI Bans Arshad Warsi : Unraveling the Stock Manipulation Scheme via YouTube Videos & Applicable Laws

Introduction

At the end of May 2025, the Securities and Exchange Board of India (SEBI) took the extraordinary step of preventing Bollywood star Arshad Warsi, his wife Maria Goretti, his brother, and almost sixty other persons from accessing India’s securities markets.

As a result of this decision, SEBI took an uncommon move. Following a comprehensive investigation into a sophisticated “pump-and-dump” plan, the regulator took action. The scheme included the exploitation of YouTube videos to entice retail investors who were unaware of the scheme to purchase shares of a minor firm called Sadhana Broadcast Limited.

By issuing this decision, SEBI has brought to light both the inventive lengths that market manipulators would go to in order to distort markets and the legal authorities that regulators have at their disposal in order to safeguard regular investors.

Background of the Sadhana Broadcast Case

After Sadhana Broadcast Limited, a firm that had previously been engaged in the production of television material, started to see a dramatic increase in its share price in the spring of 2022, it attracted the attention of both investors and regulators. This gain was not driven by true company advancements,

but rather by a rush of retail investor interest that was prompted by dazzling YouTube videos, according to a detailed investigation of trading patterns that showed this reality. These commercials portrayed an unduly optimistic image of the firm’s future prospects, predicting significant takeovers and rich contracts that never really occurred.

They also suggested that the company would be profitable in the future. A tiny network of market operators who managed both the video channels and the transactions was finally found to be the source of the deceptive campaign, according to the inquiry conducted by SEBI.

Modus Operandi of the Pump-and-Dump Scheme

On the basis of a traditional pump-and-dump framework, the scheme that was at the core of SEBI’s action was implemented. Initially, those who were responsible for the scheme acquired a significant amount of shares of Sadhana Broadcast at a price that was quite low. A series of promotional films, with names such as “The Advisor” and “Moneywise,” were then developed and broadcast on major YouTube channels by the company.

False assertions were made in these films, including the possibility of impending purchase approaches from big conglomerates and the possibility of new income streams resulting from high-value film contracts.

The stock price was artificially pushed up as a number of ordinary investors reacted by purchasing shares in large quantities. Later investors were left with losses when the share price plummeted because the initial holders of the shares sold them at a profit after the price reached its high.

Role of Arshad Warsi and Associates

Arshad Warsi’s role is labeled as more than incidental in the final decision issued by SEBI. It was shown that the actor and his family members performed transactions in their own accounts as well as the accounts of their relatives on the orders of a key operator called Manish Mishra.

This was despite the fact that they claimed to have a limited understanding of how the stock market works. Records of conversations that took place on WhatsApp indicated that Warsi and Mishra were coordinating their activities, including conversations about the transfer of funds that were intended to facilitate trading activity.

The Securities and Exchange Board of India (SEBI) reports that Warsi made earnings of more than forty lakhs of rupees, while his wife gained over fifty lakhs. According to the findings of the Securities and Exchange Board of India (SEBI), these profits were not the result of lawful investing choices but rather of involvement in the manipulative scheme.

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SEBI’s Investigation Process

Since April 2022, when monitoring systems detected unusual trading volumes and price changes in the Sadhana Broadcast share, the Securities and Exchange Board of India (SEBI) has been conducting an investigation.

During the course of many months, the regulatory body gathered information about trade, which included bank statements and communication records. A number of major market players were interrogated by SEBI officials, and video footage that was shared on social media was analyzed.

Nearly sixty persons and businesses associated to the operation had been identified by the research team by the time the year 2023 came to a close. These individuals and entities included promoters of the firm, payment middlemen, and the owners of its YouTube channels.

Beginning in the beginning of 2024, SEBI issued interim orders that froze the assets of individuals who were suspected of manipulating the market and prohibited some of them from trading until the investigation was completed.

Legal Framework and Applicable Regulations

This topic is primarily governed by the SEBI Act of 1992 and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003, which are more often referred to as the PFUTP Regulations.

Both of these pieces of legislation provide SEBI the right to take action. Any conduct that provides false or misleading appearances about the price or market activity of a security is forbidden by these rules. This includes any activity that creates false or misleading appearances.

Under Section 11C of the SEBI Act, the Securities and Exchange Board of India (SEBI) used its authority to issue final orders mandating the return of illicit profits, and it also exercised its authority under Section 11B to impose monetary penalties.

When it was discovered that people were engaging in manipulative activities, the regulator used Section 12A, which provides it with extensive authority to prevent anyone from purchasing, selling, or dealing in securities.

SEBI’s Final Order and Penalties

The Securities and Exchange Board of India (SEBI) issued an order on May 29, 2025, which prohibited Arshad Warsi, his wife, and his brother from engaging in the securities markets for a period of one year after the completion of the order.

Five-year bans were handed down to a select group of key promoters, who were found to have organized and led the operation. The Securities and Exchange Board of India (SEBI) imposed penalties.

These fines ranged from five lakh rupees on individual participants like Warsi to several crore rupees on the major architects of the scheme. Additionally, the regulator mandated that all persons who were blacklisted must return a sum of money that was greater than fifty-eight crore rupees.

This sum was intended to symbolize the illicit gains that the individuals had gained. The interest was to be charged at a rate of twelve percent per year beginning at the conclusion of the inquiry period and continuing until the actual payment was made.

Impact on Investors and Market Integrity

The action taken by SEBI has repercussions that reach beyond the people who are immediately involved. The stock fell back to its actual value, which resulted in severe losses for hundreds of individual investors who had purchased shares of Sadhana Broadcast at unreasonably high prices.

Regulatory organizations will pursue inventive manipulations wherever they occur, as shown by the decisive action of SEBI, which sent a clear message. One of the goals of the Securities and Exchange Board of India (SEBI) was to restore faith in the fairness of India’s capital markets by publicly identifying a high-profile actor and fining hundreds of other persons.

Lessons for Social Media and Investment Influencers

This instance demonstrates how readily social media platforms may be used to influence investment choices by using their ability to gather information. Especially among people who are new to the markets, videos on YouTube and other forms of internet material now play a significant role in determining the attitude of investors.

In an effort to encourage platforms to take more accountability for the financial claims that are made on their websites, SEBI has issued a call to action. Rather of relying entirely on material that is pushed by influencers, investors are encouraged to depend on official corporate disclosures and reputable news sources in order to verify information going forward.

It is anticipated that regulators will increase their supervision of digital channels and may also adopt new laws that require content makers who discuss market prospects to disclose information in a more transparent manner.

Conclusion

This is one of the most high-profile incidents of market manipulation that has occurred in recent years, and it involves SEBI’s decision to ban Arshad Warsi and almost sixty other individuals.

Both the inventiveness of fraudsters, who used prominent internet media to mislead investors, and the substantial legal instruments that are available to regulators are brought to light by this particular instance.

The Securities and Exchange Board of India (SEBI) reinforced its commitment to safeguarding regular investors and maintaining market integrity by implementing PFUTP legislation, enforcing bans, and directing the disgorgement of unlawful profits obtained. Regulators and market players will need to maintain vigilance in order to combat the ever-evolving danger posed by fraudulent schemes as digital platforms continue to have an influence on the behavior of investors.