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Insider trading, front running, and serious fraudulent or unfair trade practices cannot be settled through the consent route, said SEBI on Friday.
The consent mechanism enables entities to settle charges against them without admission or denial of guilt on payment of settlement charges. In addition, they also have to accede to other terms and conditions recommended by SEBI's High Powered Advisory Committee.
In a circular that partially modifies the framework of consent mechanism, SEBI has added a list of offences for which the consent mechanism cannot be invoked.
SEBI said that failure to make an open offer and manipulation of the net asset value of mutual fund units causing substantial losses to investors are also out of the purview of consent mechanism.
Failure to disclose under ICDR and Debt Securities Regulations; non-compliance of SEBI's summons; non-compliance of an order passed by the Adjudicating Officer (AO), Designated Member (DM) or Whole Time Member (WTM) and any other default by an entity that has not complied with any order passed by the AO, DM, WTM have also been kept out of the consent mechanism.
However, SEBI's High Powered Advisory Committee or panel of whole time members may settle any of the above exclusions through consent, if they deem fit based on the facts and circumstances of the case.
SEBI said that it would not accept consent applications until investigation or inspection on an alleged default is not completed.
Applicants cannot file a consent application if a fresh default occurs within two years of an earlier consent order.
Applicants would be ineligible if more than two consent orders have already been obtained for a period of three years, from the date of the last consent order.
One application for one proceeding or multiple proceedings due to a single cause of action has been allowed.
However, multiple proceedings due to different causes of action are not allowed. SEBI said that consent applications have to be filed within 60 days of receiving the show cause notice.
However, this is exempted if the delay is beyond the applicant's control or for cases pending before courts or tribunals. SEBI has also revised the format for filing a consent application.
The circular comes into effect immediately.
> raghavendrarao.k@thehindu.co.in
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