Number of consent applications rejected by Sebi cross 200

Since new consent framework was announced by Sebi in May last year

The Securities and Exchange Board of India rejected 25 attempts at settling regulatory proceedings through the co-called consent process during the months of July and August. The total number of such rejections since the new rules came into effect in May 25, 2012 has crossed the 200-mark.

The consent process is a settlement of regulatory proceedings between Sebi and alleged violator without admission or denial of the guilt. The market regulator imposes a fine and also a voluntary ban in some cases, while settling cases through consent.  

The latest violations that were sought to be settled through the so-called consent mechanism include breach of rules against fraudulent and unfair trade practices and insider trading regulations,

Among the pleas rejected include one by state-owned State Bank of India, which attempted to settle an alleged violation of various clauses of debenture trustee regulations through consent.

Sebi also rejected two dozen other applications, including that of a broker for irregularities at erstwhile Bank of Rajasthan. It has also turned down a number of pleas of entities and individuals involved in violation of issue of capital and disclosure requirements regulations in IPO related cases.

“The pending proceedings in these cases will continue in accordance with law. The rejection of consent application, however, shall not prejudice the pending proceedings in any manner,” Sebi said.

The regulator has rejected 204 applications since May 25, 2012 when it came out with revised guidelines for the consent order process.  Under the new framework, serious violations such as insider trading or front running cannot be settled through the consent mechanism.

Recent changes in securities law through an ordinance also brought the consent order norm under the regulatory framework.

Other offences which were kept out of the regular purview of the consent mechanism include manipulation of the net asset value of a mutual fund and failure to make an open offer.

The consent process, which is akin to an out-of-court settlement, was introduced with a view to cutting down on costs and time involved in the enforcement actions.