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The Securities and Exchange Board of India may review the processes related to settling cases after questions were raised about a possible conflict of interest on the part of Whole Time Members (WTMs) who have on the one hand investigated irregularities and passed orders, and on the other hand, also have a say in the settlement process undertaken by High Powered Advisory Committee (HPAC).
The issue was discussed at the recent Parliamentary Standing Committee on Finance held last week.
SEBI apprised the committee members that there have been instances in the past where WTMs, who have acted as a quasi-judicial authority or issued a show-cause notice (SCN) in a particular matter, have rescued themselves from the settlement process of the same case.
SEBI also assured the members that as per information available with the SEBI, the recommendations of the HPAC which were placed before the panel of WTMs have not been rejected till date.
As per the SEBI Settlement Regulations 2018, a Settlement Application is first referred to an Internal Committee (IC). The IC then places the Settlement Application before the High Powered Advisory Committee for its consideration and recommendation.
HPAC recommendations are finally placed before the panel of Whole Times Members, who are the final authority to approve the HPAC’s recommendations.
Under the SEBI settlement mechanism, an alleged wrongdoer can settle a pending case with the regulator without admission or denial of guilt by paying a settlement fee.
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