SAT asks Sebi to complete probe into Arshad Warsi’s role in Sadhna scrip scam by Dec 10

Sadha Broadcast's scrip came under the regulator's scanner after there were allegations of pump and dump using YouTube videos

The Securities and Appellate Tribunal (SAT) has asked the market regulator SEBI to complete the investigation into actor Arshad Warsi’s involvement a pump-and-dump scam in Sadhna Broadcast Limited by December 10.

If the investigation is not finished by then and a showcause notice is not issued within the time prescribed, then the appellants (Warsi and others) will be permitted to trade in Sadha’s scrip and withdraw an amount held in an escrow account. The tribunal said this is an order dated October 4.

On March 2, the Securities and Exchange Board of India (Sebi) passed an interim order banning various entities, including Arshad Warsi, from the securities market and impounding proceeds in their bank accounts to the extent of the liability the regulator’s officials had determined.

Also read: SAT quashes Sebi order against NDTV founders Prannoy Roy, Radhika Roy

Warsi appealed this and the tribunal passed an order on March 27 setting aside directions contained in the interim order but restrained the appellants (Warsi and others) from trading in the scrip of Sadhna and asked them to deposit 50 percent of the alleged unlawful gains in an escrow account. The balance amount was to be deposited within 30 days from the date of the final order from Sebi.

Sebi was directed to complete the investigation in six months.

The present SAT order noted that the regulator's investigations are still ongoing and that the regulator has moved an appeal seeking further time to complete it.

Meanwhile, Warsi and others have also filed an application seeking modification of the tribunal’s order “praying that they have cooperated with the investigation and that there is no evidence against them to date”.

Following this, the tribunal asked the market regulator to bring on record any further evidence gathered against the appellants, and the regulator responded by saying that certain fund transfers were made by Manish Mishra (Noticee 1 in the Sebi order) to Warsi.

The SAT order stated, “Considering the aforesaid, prima facie, no fresh material has come on record to show the involvement of the appellant.”

The tribunal then asked the regulator to complete the investigation by December 10, 2023. If this is not done, the tribunal’s order passed on March 27 will stand vacated and the appellants' money will be released.