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.
SEBI on Friday barred fugitive businessman Vijay Mallya from the securities markets and restrained him from associating with any listed firm for three years in the matter of routing of funds to the Indian securities market using overseas bank accounts with UBS AG.
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.
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 -- Herbertsons Ltd and United Spirits Ltd (USL) -- by routing funds through various overseas accounts.
Former liquor barron 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.
In her 37-page order, Sebi Chief General Manager Anitha Anoop said the "noticee (Mallya) in the instant case, has devised a scheme to indirectly trade in the shares of his own group companies through layered transactions/fund flow using his overseas related companies through FII route in order to keep his identity masked and trade in the Indian securities market in defiance of the regulatory norms".
Such acts of Mallya are not only fraudulent and deceptive but are a threat to the integrity of the securities market, Anoop added.
"The noticee indeed had misrepresented the truth and concealed a material fact known to him that the shareholding shown in the name of Matterhorn actually belonged to the promoter category as the same was totally funded by the noticee thereby, violating the provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations," the regulator noted.
Consequently, 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".
Also, he has been 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".
The order came after the Securities and Exchange Board of India (Sebi) investigated Mallya, who was the Chairman of the UB Group and controlling shareholder of USL, based on a tip from the Financial Conduct Authority (FCA).
Earlier in June 2018, Sebi banned Mallya from the securities market for three years(from June 1, 2018, to May 31, 2021) due to manipulative activities, including fund diversion and improper transactions in USL shares. Also, it barred him from holding a director or key managerial position in any listed company for five years.
Further, Mallya's appeal against this order was dismissed.