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Arshad Warsi gets relief from SAT against SEBI WTM Interim Order

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Regstreet Law Advisors successfully represented Mr. Ashad Warsi, Ms. Maria Goretti Warsi, Mr. Iqbal Warsi and Ms. Aahuti Mistry before the Securities Appellate Tribunal against ex-parte ad-interim order of SEBI Whole Time Member.

In brief, SEBI, basis certain complaints filed against certain misleading YouTube videos which were being used to induce investors to purchase scrip of Sadhna Broadcasting Ltd. investigated the trades and an apparent “pump and dump” scheme. While SEBI alleged that Mr. Warsi and others were part of this scheme, SAT held otherwise and observed that the appellants were not involved in the increase in the price of the scrip or in the making / distribution or uploading of the videos on the YouTube channels. Further, it was held that there is no evidence to indicate that they had induced unsuspecting investors to buy the scrip in question. Additionally, SAT held that a person dabbles in the stock exchange to make profits and there is no harm if a person buys and sells the shares to make profits and nothing has been shown by SEBI to indicate any violation of the securities laws by dubbing the appellants as volume creators. Lastly, SAT held that WTM has passed the order in haste and without considering the essential facts. In so far as the appellants are concerned, there is no iota of evidence against the appellants to show that they were engaged in a coordinated scheme to induce unsuspecting investors to acquire securities in the scrip in question. Thus, based on the above observations, SAT has set aside the directions of SEBI WTM.

SAT has directed that now the market wide ban is reduced only to restraint in trading in the scrip of Sadhna Broadcast Limited. SEBI had directed deposit of Rs. 76.33 lakhs, which has now been reduced by SAT to Rs. 38.16 lakhs (50%) to be kept in escrow till SEBI finalizes the matter.

This is a landmark order on the issue of ‘attachment before judgment’ and the manner of exercising wide powers of SEBI, as such orders disrupt lives. For the reference of readers the order has been attached below.

Readers are also welcome to send their views to Regstreet Law Advisors at info@regstreetlaw.com.

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