The Securities and Exchange Board of India (SEBI) has barred businessman Vijay Mallya from accessing the securities market for three years, in a fresh blow to the embattled liquor baron. The market regulator SEBI found Mallya guilty of routing funds through overseas accounts to trade in shares of his own companies, violating multiple securities laws.
In a 37-page order, SEBI detailed how Mallya used a complex web of overseas entities to funnel money into a Foreign Institutional Investor (FII) sub-account, Matterhorn Ventures. This account was then used to purchase shares of Herbertsons Ltd and United Spirits Ltd (USL), both companies controlled by Mallya, during 2006-2008.
“The Noticee [Mallya] has glaringly resorted to making investments through the FII route by masking his identity under the garb of an FII,” the SEBI order stated. This scheme allowed Mallya to conceal his identity while trading in his own companies’ shares, abusing the FII route meant for foreign investors.
SEBI’s investigation was triggered by information from the UK’s Financial Conduct Authority. The regulator found that Mallya had misrepresented Matterhorn’s 9.98% stake in Herbertsons as non-promoter holding when it was actually funded by him.
As a result of these violations, SEBI has:
- Barred Mallya from accessing the securities market for 3 years
- Prohibited him from associating with any listed company for 3 years
- Frozen his existing securities holdings
This action follows a previous SEBI order in 2018 that had barred Mallya for 3 years and restrained him from holding director or key managerial positions for 5 years.
Despite being given multiple opportunities to respond, Mallya did not substantively contest the allegations. The order comes into immediate effect.
This latest setback adds to Mallya’s ongoing legal troubles, including extradition proceedings in the UK related to alleged bank fraud and money laundering in India.
