Context:
SEBI has initiated a formal investigation into firms linked to the Mahadev Betting App case.
- Allegations include:
- Stock price manipulation
- Routing of illegal betting proceeds into Indian stock markets via FPIs
- Funds were reportedly routed from overseas, specifically via FPIs based in Dubai and Mauritius.
Link with Ongoing Enforcement Directorate (ED) Investigation
- The ED is probing money laundering by Mahadev Online Book promoters who allegedly:
- Operated benami bank accounts offshore
- Laundered betting proceeds and reinvested them into Indian markets
- ED has frozen assets and cash worth over ₹573 crore, and seized ₹3.29 crore in cash.
- These proceeds were invested in the promoters’ own companies through:
- Preferential share issues
- Promoter-controlled share sales
- Issuance of share warrants
Market Manipulation Allegations
- Evidence suggests a collusion between company promoters and accused individuals.
- They allegedly inflated company valuations using “tainted money” and manipulated stock prices with the help of agents and intermediaries.
Scale of Action Taken So Far
- Over 170 searches conducted by ED
- Assets worth ₹3,002.47 crore attached
- 13 arrests made and 74 entities named in five prosecution complaints
Next Steps and Regulatory Implications
- If SEBI’s probe confirms breach of FPI regulations, strict enforcement actions are expected against:
- Involved companies
- Promoters and directors
- FPI intermediaries aiding the routing of illicit funds
