The regulator was examining if he was engaging in indirect trading of shares in his own group companies.
The Securities and Exchange Board of India (Sebi) has imposed a three-year ban on Vijay Mallya, restricting his access to the securities market. The order, issued on July 26, prohibits Mallya from buying, selling, or otherwise dealing in securities, directly or indirectly, or being involved with the securities market in any capacity during this period. Additionally, he is barred from associating with any listed or prospective listed company for the same duration.
The ban follows an investigation into whether Mallya was indirectly trading shares of his own group companies. Sebi’s Chief General Manager, Anitha Anoop, stated that Mallya’s actions constituted a misuse of the Foreign Institutional Investor (FII) regulations, involving fraudulent and manipulative practices. These actions were detrimental to investors and aimed at deceiving market participants.
The investigation revealed that Mallya had orchestrated a scheme involving multiple accounts under different names with UBS Bank, including Bayside, Suncoast, and Birchwood, all of which he ultimately controlled. These entities transferred $6.15 million to Venture New Holding Limited (VNHL), also owned by Mallya. VNHL then transferred the funds to Matterhorn Ventures for share subscription.
Matterhorn Ventures, a registered sub-account of an FII – Matterhorn Advisory Singapore Pte Ltd., used these funds to purchase shares in the listed company Herbertsons. Following Herbertsons’ merger with United Spirits Limited (USL), Matterhorn Ventures received 633,333 USL shares in exchange for 950,000 Herbertsons shares. The order concluded that Mallya used this FII sub-account to indirectly trade in the shares of his own group companies, Herbertsons and USL, thereby violating market regulations.
