Sebi closes 107 cases under settlement mechanism in FY22; collects Rs 59 cr

As many as 107 applications pertaining to flouting of securities law were settled with capital markets regulator Sebi fetching Rs 59 crore through settlement charges in 2021-22.

This was way lower than 216 applications disposed of by passing appropriate settlement orders and the regulator collected Rs 68.23 crore in 2020-21, according to the latest disclosure made by Sebi in its annual report.

The settlement orders were passed in cases related to alleged violations of AIF (Alternative Investment Funds) as well as mutual fund norms, insider trading rules, PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) and LODR (Listing Obligations and Disclosure Requirements) rules, among others.

Under the settlement mechanism, an alleged wrongdoer can settle a pending case with the regulator without admission or denial of guilt by paying a settlement fee.

The settlement mechanism is a tool for ensuring speedy and efficient resolution of disputes.

During 2021-22, Sebi received 345 applications for settlement, while 150 applications were pending at the beginning of the period.

During the year, 107 applications were disposed of by passing appropriate settlement orders, while 167 were rejected or withdrawn. After this, 221 applications were still pending at the end of the period.

"For 107 applications settled during the year, Sebi collected Rs 58.81 crore towards settlement charges, including Rs 24.32 lakh towards settlement charges, and Rs 37.54 lakh was recovered as legal charges," Sebi said in its annual report for 2021-22.

In addition, consolidated settlement orders were passed against 1,018 entities under Settlement Scheme 2020, wherein Rs 87.38 crore was collected as settlement charges.

These 1,018 entities paid settlement charges in the range of Rs 5-42 lakh.

Also, Rs 24.2 crore was mobilised as disgorgement charges during the year under review. Under Settlement Scheme 2020, Sebi provided a one-time settlement opportunity to the entities who were involved in reversal trades in the stock options segment on BSE in 2014 and 2015 and against whom enforcement proceedings were initiated.

In January this year, Sebi overhauled the rule governing consent settlements to make the system more effective. The time limit for filing settlement applications has been reduced from 180 to 60 days.

Prior to this, the entities were provided with a window of 180 days to apply for settlement after receipt of the show-cause notice.

"On most occasions, the applicants apply for settlement towards the end of this timeframe. Such delays not only do not serve the purpose of the enforcement process but also impede the expeditious disposal of the enforcement proceedings," Sebi had said.