Sebi proposes norms for consent settlement of disputes

Under the new norms, entities involved in cases of default proceedings barring cases of insider trading, employing manipulative practices and illegal raising of public money may apply for settlement

GN Bureau | October 15, 2013



The markets watchdog securities and exchange board of India (Sebi) has come out with new norms for settling administrative and civil disputes against defaulters barring cases of insider trading, employing manipulative practices and illegal raising of public money.

According to the consultation paper on the draft Sebi (Settlement of Administrative and Civil Proceedings) Regulations, 2013 released by the markets watchdog, an entity involved in a case barring those listed as exceptions, can file a settlement plea within 60 days of the show cause notice served by Sebi. However, Sebi has clarified that the settlement facility does not exist with entities which have already been part of two earlier settlements.

Listing out a detailed number of conditions under which an entity cannot apply for settlement, the regulator has also said that the new settlement facility would not apply to cases that are being tried in any court or tribunal. This leaves out any hope for the Sahara group of companies to benefit by stalling their case and applying for a settlement.

Also, an entity will not be allowed to apply for a settlement if he/she has applied for a settlement in the last two years. 

In order to settle a case, an entity may be required to pay a settlement amount and other related costs, voluntary suspending registration of the entity, and finally, winding up of business.

In the consultation paper, Sebi has also mentioned that a high powered advisory committee will be set-up for deciding the settlement terms. Further, the quorum of the committee would be three members.

"The high powered advisory committee shall consist of a retired Judge of a High Court and three external experts having expertise in the securities market or for matters connected therewith or incidental thereto," Sebi said.

The regulator has invited suggestions from the general public by October 30, 2013.
 

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