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The Securities and Exchange Board of India is considering changes to its settlement norms by bringing in a new provision that would enable settling all ‘insignificant’ cases without any “market-wide impact” on payment of certain charges.
The cases pertaining to serious securities market violations, which may have severe impact on the markets, would be left out of the consent framework, SEBI Chairman U K Sinha said today.
“We have conducted a review of our consent mechanism and have found that the total number of consent cases in 2015-16 has come down and the reason it is coming down is that there is a provision in our consent regulations on PFUTP (Prevention of Fraudulent and Unfair Trade Practices) violations about whether it has market-wide impact or not.
“But, our officers and advisory committee were not very sure about what is a market-wide impact,” Sinha told reporters on the sidelines of a summit.
“SEBI’s intention is that we focus more on serious cases. So we want insignificant cases are taken through this (consent mechanism). Accordingly, we have clarified that to the team, through a guideline, what is the market wide impact.
“The next stage is that there is demand from experts that SEBI should do this through a regulation. So we will be moving in to introduce such changes for some regulations on that,” he said.
In the consent settlement process, the entity facing a probe by SEBI is subjected to certain fees and restrictions without admission or denial of alleged irregularities, and the regulator thereafter drops its charges and the investigations with a caveat that all disclosures made to it are correct. The case can still be re-opened if some new facts come up later.
In the past, SEBI has refused consent settlement in some big cases, including Reliance Industries and its erstwhile subsidiary Reliance Petroleum, for alleged insider trading.
After SEBI refused to allow consent settlement, the Mukesh Ambani-led company had challenged the decision at the SAT, but its plea was rejected there also. SEBI is yet to pass its order in this case and some experts believe that the changes in settlement norms may pave the way for RIL to make a fresh attempt at settlement process.
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