The Security Appellate Tribunal recently set aside the order of Securities Exchange Board of India (SEBI) to freeze the accounts of Arshad Warsi, his wife and others in relation to YouTube stock market manipulation. The tribunal has granted an interim relief to the entities involved. They have been further directed to put half of their gains from the manipulation in an escrow account in 15 days.

Background:

In the case at hand, misleading YouTube videos were uploaded that were given financial support by marketing campaigns worth crores of rupees to gain additional reach in order to lure in investors. Resultantly several investors got their money involved but the entities responsible offloaded their holding at an inflated price.

The YouTube channels showing these misleading videos were “The Advisor” and “Moneywise”. As a result of these videos Arshad Warsi Gained a profit of over 29 lakhs and his wife made a profit of over 37 lakhs. Thereafter, complaints were made to SEBI alleging that there was price manipulation and offloading of shares by entities.

Previous Proceedings:

The Securities and Exchange Board of India (SEBI) had imposed a penalty on Arshad Warsi and his wife along with 29 other entities. SEBI has restrained them from the securities market putting a restriction on them from buying, selling or dealing in the market for fraudulent and unfair trade practices.

SEBI further observed that the said misleading videos were suggesting that the investors should buy the scrip to earn big profits. It was observed that misleading statements about the growth of the company were made in the videos. The SEBI observed that fraudulent and manipulative practices distort fair price discovery and defeat one of the basic purposes of an organized securities market.

In the light of the aforementioned, SEBI restrained Arshad Warsi, his wife and 29 other entities from the securities market. It was further directed that proceeds of their bank accounts must be taken custody of or should be seized to the extent of their liability in the matter. The said amount should be deposited in an escrow account with a commercialised bank. The amount is to be deposited within 15 days of the date of order.

It was also ordered that neither can any debits be made in the said account without the permission of SEBI nor can the notices dispose of alienate assets before the said amount is deposited in the escrow account.