According to the order, Mallya is barred from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner.
The once famous liquor baron is also restrained from associating himself with any listed company or proposed to be listed company.
During the period of ban in place, Mallya’s existing holding of securities including the holding of units of mutual funds will be freezed, the regulator said.
The order was passed in the matter of routing of funds to the Indian securities market using overseas bank accounts with UBS AG.Sebi had suo-moto taken up the matter for investigation based on the findings in the communication from the Financial Services Authority to find out whether there was any routing of funds to the Indian securities market by Mallya.The investigation, prima facie, revealed that that Mallya had used a sub-account i.e, Matterhorn Ventures, a foreign institutional investor (FII), as an investment vehicle to indirectly trade in scrips of his own group entities in India i.e. Herbertsons and USL.Thus, the investigation revealed that the amounts paid to Matterhorn Ventures were routed by the Mallya by opening various beneficiary accounts with UBS and routing these funds through these accounts, indirectly to the Indian securities market.
It was also observed that this financial route (FII route) was taken by Mallya in the names of various overseas registered entities, thereby concealing the true identity of his investments in the Indian securities market.
Sebi found that the acts of Mallya were in abuse of the framework of the FII Regulations. He followed manipulative practices and employed a deceptive artifice in his dealings with the securities of listed companies of his group in India.
“Mallya has been indulging in manipulative and fraudulent activities and indulging in unfair trade practices while dealing in the securities market in violation of the securities laws, ” the order noted.