SEBI Notifies Revised Settlement Formula and Fast-Track Route for Small Cases

Key facts

• The Securities and Exchange Board of India (SEBI) notified new regulations on October 6 providing a revised formula for calculating settlement amounts and a fast-track settlement route.
• Under the new framework, settlement terms comprise the settlement amount, disgorgement of wrongful gains where applicable, and remedial and regulatory terms, removing the existing double counting of wrongful gains, loss avoided or loss caused to investors.
• The settlement amount is based on a base amount linked to the minimum penalty prescribed for the violation, adjusted by factors such as 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 excluded from the base amount and, where quantified, are disgorged separately.
• Fast-track settlement has two types: violation-based and monetary threshold-based; cases with settlement amounts up to ₹10 lakh move directly from the internal committee to a panel of whole-time members.
• Under violation-based fast-track settlement, covering certain disclosure-related violations, SEBI will issue a notice offering the entity an opportunity to settle by paying the specified amount.