YouTubers Vs SEBI: Wishful Thinking Not Enough, Says Arshad Warsi's Counsel

SEBI had barred Warsi, his wife, and 29 others from the market for alleged involvement in stock manipulation of Sadhna Broadcast.
<div class="paragraphs"><p>Arshad Warsi (Source: Instagaram)</p></div>
Arshad Warsi (Source: Instagaram)

Wishful thinking, however laudable, is not sufficient to attach the bank accounts of the entities that the market regulator has alleged were involved in the YouTube stock manipulation case, Bollywood actor Arshad Warsi's counsel argued before the SAT on Friday.

The Securities and Exchange Board of India must provide sufficient and material reasons to do so, Warsi's counsel said.

Earlier this month, SEBI barred Arshad Warsi; his wife, Maria Goretti; and 29 others from the stock market for their involvement in the stock manipulation of Sadhna Broadcast Ltd. through YouTube videos.

Both of them cumulatively booked a gain of approximately Rs 67 lakh under the scheme, according to SEBI. The regulator also froze the accounts of all persons involved until the unlawful gains were deposited in an escrow account.

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According to Warsi's counsel, he was not part of the scheme as alleged by the regulator and is merely a trader. The actor has neither taken part in nor promoted either of these videos. He had undertaken the trade at the instance of Manish Mishra, who is associated with him for one of his upcoming films.

He also did not make any profit from the investment, as a further investment in the shares of Sadhna resulted in a loss of over Rs 80 lakh. The attachment of Warsi's account is completely unwarranted, the counsel said.

The provisions of the Civil Procedure Code clearly bar the attachment of assets until there is sufficient material evidence to demonstrate the necessity of the action. In this case, there is no material evidence to show that Warsi was part of the scheme, nor is there any evidence to show that he might run away with the money, according to the counsel.

Call data records are insufficient to prove Warsi's participation in the scheme, which makes the attachment completely unnecessary, he said.

According to SEBI, Warsi has already admitted to booking profits on the sale of shares of Sadhna. The fact that the trade was undertaken at the request of Mishra makes him part of the conspiracy.

It pointed out that just because Warsi couldn't book further profits from his subsequent investment, that did not invalidate the profits he made during the first trade.

The regulator contended that the power to attach the bank accounts of entities is well within its rights. The powers are extensive under the SEBI Act and are not subject to the limitations provided under the Civil Procedure Code. If the legislation intended to do so, it would have been provided in the act.

The Securities Appellate Tribunal has reserved its order in the matter.


Sahyaja S is a correspondent at BQ Prime. She is a lawy...more
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