New Delhi: The Securities and Exchange Board of India (SEBI) has taken decisive action against fugitive businessman Vijay Mallya. In a landmark move, SEBI has banned Mallya from the Indian securities market for three years. Let’s delve into the specifics:
- The Ban and Its Impact:
- Mallya, once a prominent figure in the business world, will no longer be able to participate in any transactions within the securities market during these three years.
- SEBI’s order also freezes all of Mallya’s security holdings, including mutual fund units.
- Background:
- This isn’t the first time Mallya has faced SEBI’s wrath. Back in June 2018, he was barred from the securities market for three years due to manipulative activities, including fund diversion and improper transactions involving United Spirits Limited (USL) shares².
- Now, the recent ban stems from Mallya’s illicit routing of funds to inflate his own company stocks. His holdings in stocks and mutual funds in India have been frozen, and he is prohibited from being a director in any listed Indian company³.
- The Investigation:
- SEBI’s Chief General Manager, Anita Anup, led the investigation. Evidence revealed that Mallya not only violated Foreign Institutional Investor (FII) rules but also engaged in questionable buying and selling of securities within his group of listed companies in India.
- These actions were detrimental to investors and aimed at deceiving market players.
- Hidden Identity and Misuse:
- Mallya used an FPI (Foreign Portfolio Investor) company named Matterhorn Ventures to transact in shares of liquor companies like Herbertsons and USL.
- Matterhorn Ventures held 9.98 percent shares of Herbertsons, which were actually in the promoter category and fully funded by Mallya.
- SEBI discovered that Mallya had opened multiple accounts under different names (Bayside, Suncoast, and Birchwood) at UBS Bank, all related to Herbertsons and USL shares. These accounts facilitated the transfer of $6.15 million to Mallya⁴.
- Extradition Efforts:
- The Indian government has been actively seeking Mallya’s extradition from the United Kingdom, where he has been residing since March 2016.
- The fraud charges against him are related to his now-defunct company, Kingfisher Airlines.
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