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New Delhi: Bollywood actor Arshad Warsi, his wife Maria Goretti, and 57 others have been barred from the securities market by SEBI for their alleged role in a stock manipulation case involving Sadhna Broadcast Ltd, now renamed Crystal Business System Ltd.

The action comes after SEBI uncovered a classic case of “pump-and-dump”, a fraudulent trading practice aimed at artificially inflating share prices before selling them for profit.

What is pump-and-dump?

Pump-and-dump is a market manipulation scheme. It involves artificially increasing the price of a stock (the “pump”) using false or misleading information, and then selling off the stock at the inflated price (the “dump”).

This practice misleads retail investors into thinking the stock is promising, drawing them into buying it at high prices. Once the manipulators offload their shares, the stock price crashes, leaving unsuspecting investors with losses.

How did the scheme work in the Arshad Warsi case?

According to SEBI’s 109-page final order, the pump-and-dump scheme around Sadhna Broadcast shares was executed in two coordinated phases:

Phase 1: Price inflation

Entities linked to the promoters of Sadhna Broadcast carried out trades among themselves. These trades, though small in volume, significantly pushed the share price upward due to low market liquidity. The goal was to show artificial market interest and steady price rise.

Phase 2: Hype creation

In the second phase, misleading promotional videos were published on YouTube channels such as Moneywise, The Advisor, and Profit Yatra, all operated by one of the masterminds, Manish Mishra. These videos falsely portrayed the stock as a high-potential investment, further luring retail investors.

According to SEBI, the promotional activity coincided with the price surge, boosting public interest and trading volume in the stock.

SEBI’s findings and action

SEBI identified actors Gaurav Gupta, Rakesh Kumar Gupta, and Manish Mishra as the masterminds of the scheme. Several others, including Arshad Warsi and his wife, were found to have earned significant profits from trading the stock during the manipulated period.

Both have been fined Rs 5 lakh each and banned from the securities market for 1 year. In total, SEBI has imposed penalties ranging from Rs 5 lakh to Rs 5 crore on 57 other entities.

The regulator also directed disgorgement of Rs 58.01 crore — the total unlawful gain — with 12% annual interest, from all 59 accused entities.

Why is this significant?

Pump-and-dump schemes are illegal in India under the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations. These schemes distort the market and harm investor confidence. SEBI’s action sends a strong signal against the misuse of social media and celebrity influence to manipulate stock prices.

SEBI began probing the matter following complaints in mid-2022. An interim order was passed in March 2023. The current order, passed on May 30, 2025, is SEBI’s final word in the matter.

This case is one of the biggest recent examples of how digital platforms like YouTube are being misused for stock manipulation — and how SEBI is stepping up enforcement to protect investors.

(with inputs from PTI)