The Securities and Exchange Board of India (SEBI), on Monday, proposed new norms for settlement of administrative and civil proceedings against suspected market defaulters, except in cases of serious violations such as illicit pooling of funds from investors, insider trading and fraudulent and unfair trades. The list of violations that cannot be settled has been expanded widely under the new norms, which also provide for the involved entity to file settlement plea within 60 days of the show-cause notice served by SEBI.
The market regulator has said that a plea to settle pending cases, upon payment of settlement charges and related costs, will not be considered if the applicant has already been party to two earlier settlements.
Besides, cases already pending before a court or tribunal cannot be settled under the new norms. An entity cannot seek settlement of any proceedings if the alleged default has been committed within two years of an earlier settlement involving them.
ADVERTISEMENT
Also, settlements cannot be sought for cases involving non-compliance to SEBI orders, violations to the open offer requirements, listing disclosure norms, front running, sharing of unpublished price-sensitive information, manipulative practices of mutual funds, and failure to redress investor grievances, among other serious offences.
Issuing consultation paper on the draft SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2013, the capital market regulator said the terms of settlement might include payment of a settlement amount and other related costs, voluntary suspension of registration, closure of business, and other appropriate directions.
The settlement amount will be credited to Consolidated Fund of India, while legal costs will go to the SEBI General Fund. The disgorged illegal gains, if any, will be credited to the Investor Protection and Education Fund of SEBI, the regulator said, while inviting public comments on the draft norms by October 30.
ADVERTISEMENT
The new norms have been proposed pursuant to promulgation of the Securities Laws (Amendment) Second Ordinance, 2013, by the President last month.
While a consent mechanism is already in place at SEBI for settlement of cases involving certain alleged violations, the new norms will give wider powers to SEBI for settlement of administrative and civil proceedings within a legal framework. — PTI
Our Mumbai Correspondent adds:
High-power panel
SEBI proposed to constitute a high-power advisory committee, comprising a retired judge of a High Court and three external experts from the securities market or areas connected to it, to consider matters for settlement of defaulters.