SEBI Bars Vijay Mallya from Indian Capital Markets for 3 Years Over UBS Fund Routing

Mumbai: The Securities and Exchange Board of India (Sebi) has barred former liquor baron Vijay Mallya from accessing the securities market for three years. This decision comes after it was found that Mallya had routed funds to the Indian capital markets using his overseas bank accounts with UBS.

Sebi also banned Mallya from associating with any listed company, either directly or indirectly, for three years.

Sebi’s investigation, based on findings by the UK’s Financial Conduct Authority, covered the period from January 1, 2006, to March 31, 2008.

The probe revealed that Mallya used Matterhorn Ventures, a sub-account of a foreign institutional investor (FII), as an investment vehicle to indirectly trade shares of his own companies in India, namely Herbertsons and United Spirits.

Sebi alleged that Mallya routed funds through various beneficiary accounts with UBS. These funds were then used in the Indian securities market under the names of different overseas registered entities to hide Mallya’s true identity in these investments. Sebi also noted that Matterhorn Ventures was incorrectly shown as a non-promoter public shareholder in the shareholding pattern of Herbertsons, while it actually belonged to the promoter category with a 9.98% shareholding.

On April 23, 2023, Sebi issued a show cause notice to Mallya for engaging in fraudulent and unfair trade practices.

Mallya responded by saying that the notice pertained to transactions and monetary dealings from at least 15 years ago, arguing that Sebi had delayed its investigation for too long.

Sebi countered by explaining that the investigation required data collection from international regulators regarding foreign entities, making the process complex and time-consuming.

“I find that, in order to trade in the shares of USL and Herbertsons, the noticee (Mallya) devised a scheme of opening multiple accounts in various names with UBS, including Bayside, Suncoast, and Birchwood, of which the noticee was the ultimate beneficial owner,” Sebi stated.