The Securities and Exchange Board of India has barred former liquor baron Vijay Mallya from accessing the securities market for three years for routing funds to the Indian capital markets using his overseas bank accounts with UBS.

The regulator has also restrained Mallya from associating with any listed company, directly or indirectly, for three years.

Sebi’s investigation is based on the findings of Financial Conduct Authority, its counterpart in UK, for the period from January 1, 2006 to March 31, 2008.

It had suo-moto taken up the instant matter for further investigation based on the findings in the communication from the Financial Services Authority (now known as Financial Conduct Authority and hereinafter referred to as ‘FSA/FCA’) to ascertain whether there was any routing of funds to the Indian Securities Market by Mallya, Chairman of the UB Group and individual controlling shareholder of United Spirits Limited (‘USL’) during the relevant period, through his bank accounts with UBS AG, London (‘UBS’) in violation of the provisions of the SEBI Act, 1992, SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as the ‘PFUTP Regulations, 2003’) and the rules and regulations framed thereunder during the period from January 01, 2006 to March 31, 2008.

In its 37 pages order, the SEBI said the noticee  (Vijay Mallya) is hereby restrained 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 (3) years from the date of this order.

“The noticee is further 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 (3) year from the date of this order. Further, during the period of restraint, the existing holding of securities including the holding of units of mutual funds of the Noticee shall remain frozen,” it said.

The investigation, prima facie, revealed that that the noticee 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 Limited (‘Herbertsons’) and USL. Thus, the investigation revealed that the amounts paid to Matterhorn Ventures were routed by the Noticee by opening various beneficiary accounts with UBS and routing these funds through these accounts, indirectly, to the Indian Securities Market.