Financial market regulator SEBI has barred fugitive businessman Vijay Mallya from accessing the securities markets for three years, with immediate effect, on charges that he masked his identity and traded in Indian securities.
In an order released on Friday on the regulator's website, SEBI said Mallya is restrained from accessing the securities market and further prohibited from buying, selling, or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, for a period of three years.
Restriction on Vijay Mallya
The fugitive businessman is further restrained from associating himself with any listed company or proposed to be listed company in any capacity, directly or indirectly, for a period of three years.
Further, during the period of restraint, the existing holding of securities including the holding of units of mutual funds of Mallya shall remain frozen, the order said.
SEBI, in its 37-page order, stated that it is clearly established that Mallya has abused the Foreign Institutional Investment mechanism or route for investing his surplus funds kept abroad and had not revealed the same to the investors of these companies in India.
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Funds through a proxy
"I, therefore, find that the Noticee has glaringly resorted to making investments through the FII route by masking his identity under the garb of an FII i.e. Matterhorn Ventures to the detriment of the interest of shareholders of Indian companies," the order read.
"Such acts of the Noticee are not only fraudulent and deceptive but are a threat to the integrity of the securities market," the order read.
Securities and Exchange Board of India (SEBI) had suo-moto taken up the matter for investigation based on the findings in the communication from the Financial Services Authority (now known as the Financial Conduct Authority) to ascertain whether there was any routing of funds to the Indian securities market by Vijay Mallya, Chairman of the UB Group and individual controlling shareholder of United Spirits Limited.
Facts from investigation
The investigation, prima facie, revealed that Mallya had used a sub-account, Matterhorn Ventures, a Foreign Institutional Investor (FII), as an investment vehicle to indirectly trade in shares of his group entities in India, Herbertsons Limited and USL.
Three opportunities for a hearing were also granted to him on March 14, 2024, May 28, 2024, and June 13, 2024. SEBI, in its order, said he did not respond on merit or the violations alleged in the show cause notice.
Liquor baron Vijay Mallya, a fugitive accused in a bank loan default case of over Rs 9,000 crore, is in the UK.
