Sebi proposes settlement framework overhaul, seeks simpler calculations

The Securities and Exchange Board of India (Sebi) has introduced a consultation paper to overhaul its settlement framework, aiming to make regulatory resolutions simpler, more predictable, and less discretionary. Key proposals include a new formula for calculating settlement amounts based on minimum penalties and multipliers, and the exclusion of wrongful gains from the base settlement amount, though such gains would still be subject to disgorgement.

To reduce litigation, Sebi intends to allow settlement applications at the appellate stages before the Securities Appellate Tribunal (SAT) and the Supreme Court. The regulator also proposes reducing the additional charge for refiling withdrawn applications from 50% to 20% and increasing minimum filing fees for individuals and entities. Additionally, the proposal seeks to clarify how defaults are counted, potentially treating repeated acts from the same conduct as a single default.

Industry experts suggest these changes represent a shift from settlements being an expensive exception to becoming a credible alternative to prolonged enforcement litigation. However, the success of the framework will depend on whether the final regulations provide sufficient certainty and reduce residual discretion to ensure the process is predictable and proportionate.

(Source：Business Standard)