SEBI Unveils Settlement Calculator to Streamline Transparency in Charges

In a significant move aimed at enhancing transparency and simplifying procedures, the Securities and Exchange Board of India (Sebi) introduced a beta version of its settlement calculator on Thursday. This innovative tool is designed to assist applicants in calculating an indicative settlement amount for violations, marking a step forward in making regulatory processes more accessible and transparent.

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The newly launched settlement calculator features various fields where applicants can specify the nature of their violations. It further allows them to select options based on their past regulatory track record, including actions taken by Sebi and details of any other ongoing proceedings as of the date of filing the settlement application. To aid in understanding how to arrive at the indicative settlement amount, Sebi has also incorporated a user-friendly guide video within the calculator.

Sebi's settlement mechanism permits an alleged wrongdoer to resolve pending matters without admitting or denying guilt, by paying settlement charges. The introduction of the settlement calculator is aimed at streamlining this process, in accordance with the parameters set out in the Sebi Settlement Proceedings Regulations, 2018.

The indicative settlement amount (IA) will be determined based on guidelines issued by Sebi, starting from a minimum of Rs 3 lakh for first-time applicants and Rs 7 lakh for others. A "first-time applicant" is defined as an entity with no prior orders or settlements with Sebi. The IA will be calculated per default, taking into account inspection reports, investigation reports, or orders from relevant authorities, and adjusted using the Proceeding Conversion Factor (PCF) based on the case's stage. Special considerations will be given to entities undergoing insolvency or management changes, and those who self-report a default before receiving a notice will benefit from a lower PCF.

Sebi's internal committee, the high-powered advisory committee (HPAC), or the Panel of Whole Time Members (WTMs) have the authority to modify charges based on different defaults observed. They can accept, reject, or adjust an application and settlement amount depending on the specifics of a case. For corporate applicants, charges may be levied on responsible officers to safeguard investors' interests.

Additionally, Sebi has outlined special rules for unique defaults not covered by existing guidelines, providing flexibility in determining settlement amounts. In instances where more than one proceeding arising from the same cause of action has been initiated against an applicant, the IA will be increased by 20 percent. Moreover, for non-disclosure under certain regulations, the base amount may be reduced by 75 percent.

This initiative by Sebi is expected to make the settlement process more straightforward and transparent for applicants, thereby facilitating better compliance and governance within India's capital markets.