SEBI Notifies New Settlement Rules With Revised Formula to Prevent Double Counting And Speed Up Cases Below ₹10 Lakh
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SEBI has revised its settlement calculation framework to prevent double counting of wrongful gains. It has also introduced a fast-track route for cases with settlement amounts of up to ₹10 lakh.
The Securities and Exchange Board of India (SEBI) has revised existing settlement regulations and changed how settlement amounts for securities law violations are calculated. The framework also introduces a fast-track process for eligible cases involving settlement amounts of up to ₹10 lakh.
The new SEBI settlement rules separate settlement amounts from the disgorgement of wrongful gains and losses avoided or caused to investors. This is intended to prevent such amounts from being counted twice when settlement terms are calculated.
How Will The New SEBI Settlement Formula Work?
As per the updated SEBI settlement formula, the calculation will begin with a base amount that is linked to the minimum penalty prescribed for the violation under securities laws.
The base amount will then be adjusted according to various factors that relate to the stage of the proceedings, regulatory action, seriousness of the violation, aggravating and mitigating circumstances, and legal costs, etc.
Wrongful gains, losses avoided and losses caused to investors will not form part of the base amount. Where quantified, these amounts will instead be disgorged separately.
Settlement terms will comprise three elements: the settlement amount, disgorgement of wrongful gains wherever applicable, and remedial and regulatory terms, previously referred to as non-monetary terms.
Which Cases Qualify For SEBI’s Fast-Track Settlement Route?
SEBI has introduced two types of fast-track settlement: a violation-based route and a monetary threshold-based route.
Under the monetary threshold-based process, cases with settlement amounts not exceeding ₹10 lakh will move directly from the internal committee to a panel of whole-time members. This removes an intermediate stage from the process for eligible cases.
Under the violation-based route, SEBI will issue a notice offering the entity an opportunity to settle by paying the amount specified in that notice. The framework also covers certain disclosure-related violations.
This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Vishwa has spent 10+ years across fintech and FMCG doing what most people miss, connecting the dots, catching trends before they trend, and finding the angle nobody else thought to ask about.
At Kotak Neo, she drives content strategy for neoshorts, Kotak News Desk, and Investing Guide, turning market noise into something worth reading.
When she's not decoding markets, she trades charts for canvases, chasing art, painting, and architecture across cities she's yet to explore.
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