Stories
Sebi Overhauls Settlement Rules With New Formula And Fast-Track Route
- •Markets regulator Sebi has notified new regulations featuring a revised formula for settlement amounts and a fast-track route for cases up to Rs 10 lakh.
- •The framework eliminates the double counting of wrongful gains by providing for their separate disgorgement alongside the settlement amount and remedial terms.
- •The new calculation formula uses a base amount linked to minimum penalties, adjusted for factors like violation gravity, legal costs, and mitigating circumstances.
- •A fast-track settlement route has been introduced based on monetary thresholds and specific violation types, streamlining the resolution of less serious matters.
- •Cases involving financial statement misrepresentation or fund diversion can now be settled subject to remedial measures and the return of diverted funds.
Key Questions Answered
The revised formula uses a base amount linked to the minimum statutory penalty prescribed for the violation under securities laws. This base amount is adjusted using various factors, including the stage of proceedings, regulatory action, gravity of the violation, aggravating and mitigating factors, and legal costs.
Wrongful gains, loss avoided, or loss caused to investors are no longer included when determining the base settlement amount, which removes the previous issue of double counting. Instead, these quantified amounts are now disgorged separately alongside the settlement amount and remedial terms.
Fast-track settlements are divided into violation-based and monetary threshold-based routes. Under the monetary threshold route, cases where the settlement amount does not exceed Rs 10 lakh move directly from an internal committee to a panel of whole-time members.
