The investigation, prima facie, revealed that Vijay Mallya had used a sub-account Matterhorn Ventures as an investment vehicle to indirectly trade in shares of his group entities in India.
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.
Sebi has barred Mallya 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”.
Such acts of Mallya are not only fraudulent and deceptive but are a threat to the integrity of the securities market, said Sebi Chief General Manager Anitha Anoop.
The Indian government has been attempting to extradite Mallya from the United Kingdom to face fraud charges related to his now-defunct company Kingfisher Airlines. Mallya has been living in the United Kingdom since March 2016.
Vijay Mallya Masks Identity To Trade In Indian Stock Market: SEBI
An investigation conducted by Sebi covering January 2006 to March 2008 found that Mallya used Matterhorn Ventures, a Foreign Institutional Investor (FII), to secretly trade shares of his group companies named Herbertsons Ltd and United Spirits Ltd (USL) by routing funds through various overseas accounts.
Businessman routed money through various accounts with UBS AG to the Indian securities market using Matterhorn Ventures. He used different overseas entities to hide his true identity, the probe found.
Matterhorn Ventures was wrongly listed as a non-promoter public shareholder in Herbertsons even though its 9.98 per cent shareholding belonged to the promoter category, the order noted.
What SEBI Said On Vijay Mallya’s Trade 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.
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.
“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 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.
(With Inputs From Agencies)