How Indian YouTube influencers are manipulating the stock market

Bollywood actor Arshad Warsi and his wife Maria Goretti also fined for being part of nexus that made $5 million illegally
How Indian YouTube influencers are manipulating the stock market
Photo: Shailesh Andrade (Reuters)
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India’s financial markets regulator Securities and Exchange Board of India (Sebi) has cracked down on two YouTube channels for allegedly manipulating stock prices by serving misleading information.

Sebi has barred more than 50 entities that used YouTube channels The Advisor and Moneywise to fraudulently promote the shares of Sharpline Broadcast and Sadhna Broadcast.

The Advisor and Moneywise, operated by Manish Mishra and Manjiri Tiwari, are also accused of making extraordinary gains by broadcasting false news and using influencers and celebrities to recommend these stocks to retail investors.

Bollywood actor Arshad Warsi and his wife Maria Goretti Warsi, among those that the channels used, have been fined. Warsi earned $35,650 for his service and Goretti earned $45,480, according to Sebi. Sebi has also reportedly banned the duo, among a dozen others, from participating in India’s share market.

The regulator estimates the whole nexus to have made illegal profits of up to $5.07 million.

“...misleading YouTube videos with false content, backed by paid marketing campaign worth crores of rupees for additional reach, were being uploaded to lure investors,” a Sebi order said today.

India has seen a significant post-pandemic rise in social media influencers and the use of influencer marketing tactics. Sebi’s move now puts the spotlight on their role in stock markets as they dish out recommendations and financial management tips, often without professional expertise.

Inside the Sharpline and Sadhna nexus

Simply put, this pump-and-dump scheme involved the now-barred 50-odd entities for artificially inflating the share prices of Sharpline and Sadhna. They did this by using influencers and celebrities on The Advisor and Moneywise to get lay investors to buy them.

Once the prices rose sufficiently high, these entities would unload their own holdings in Sharpline and Sadhna for a neat profit.

“These channels had lakhs of subscribers and the misleading videos had crores of viewership aided by promotion through paid advertising campaigns. Subsequently, the misleading YouTube videos ceased to be available for public viewing,” the Sebi order read.

Sebi’s probe tracked a rise in prices and trading volumes of Sharpline and Sadhna shares following the release of promotional videos. The number of investors in the scrips increased from 857 to 55,343, Moneycontrol reported.

Sebi also tracked a payment of $572,000 from Mishra’s bank account to Google AdSense between January to September 2022 towards promoting the videos.