Sebi to Revamp Settlement Rules, Curb Penalties

The Securities and Exchange Board of India (Sebi) has launched a review of its case settlement rules to simplify calculations, address concerns about inflated penalties, and make the process more accessible for market participants.

What Is the Case Settlement Framework?

SEBI’s settlement mechanism allows individuals or entities accused of market violations to settle cases by paying a settlement amount without undergoing lengthy litigation.
It helps:

• reduce enforcement backlog
• ensure faster regulatory resolution
• avoid prolonged legal uncertainty

Key Objectives

• Simplify and expedite settlements: Encourage voluntary settlement rather than waiting for regulatory action.
• Reduce disproportionate penalties: Address complaints that base amounts, unrelated charges, and interest on disgorgement inflate total settlement sums.
• Clarify non-monetary penalties: Re-evaluate practices like market bans and mandatory declaration of ‘officers in default,’ which are seen as beyond the committee’s scope.