SEBI upholds ban on 22 entities in Sadhna Broadcast stock manipulation case

SEBI, the market regulator, has confirmed its ban on 22 entities involved in a case related to the manipulation of Sadhna Broadcast's share price. The manipulation was carried out through the dissemination of misleading videos on YouTube channels. The ban restricts these entities, with the exception of Kundan Singh Bisht, from trading Sadhna's stock during the ongoing investigation. The estimated illegal gains from this manipulation have been revised to Rs 38.61 crore.

SEBI's Whole-Time Member, Ananth Narayan G, issued a confirmatory order that upheld the ban on 21 entities, as their submissions were insufficient to refute the preliminary findings of fraudulent and manipulative activities in the interim order issued on March 2, 2023.

The regulator noted that the liability for the illegal gains made by each entity would be borne individually. It also revoked the impounding orders against Subhash Agarwal, Saurabh Gupta, Paras Shah, and Arpan Gupta, as no illegal gains were found to be directly linked to their trades.

In a gesture of leniency, Bhim Singh Chaudhary and Yogesh Kumar Gupta were allowed to withdraw funds up to Rs 1 lakh per month to cover medical expenses for their family members.

SEBI's latest order covers 22 entities, with the Securities Appellate Tribunal (SAT) previously setting aside the interim order for four noticees. A confirmatory order dated July 20 has also been issued concerning five other noticees. The regulator emphasised that the investigation would proceed without any influence from the previous orders, and appropriate legal proceedings would follow based on the investigation's outcome.

In its initial order from March 2, 2023, SEBI revealed that false and misleading videos about Sadhna Broadcast were uploaded on YouTube channels in the latter half of July 2022. These videos promoted buying Sadhna stock for extraordinary profits, leading to an increase in the stock's price and trading volume. This surge was primarily fueled by retail investors influenced by the misleading YouTube content.

Promoters, key management personnel, and non-promoter shareholders of Sadhna took advantage of the inflated prices to sell a significant portion of their holdings and book profits. 

SEBI categorised the involved entities into different roles, including creators of YouTube channels, net sellers/promoters, profit makers, volume creators (VCs), and information carriers (ICs). Together, they orchestrated a "pump-and-dump" scheme for Sadhna Broadcast Limited, creating trading volumes and interest while spreading false and misleading information to induce small investors to buy the stock at elevated prices.

(With PTI Inputs)