Sebi Unveils Beta Settlement Calculator for Transparent Market Regulation

Sebi has launched a beta version of its settlement calculator to simplify and increase transparency in determining settlement amounts for regulatory violations. The tool allows applicants to input violations and past regulatory records. A guide video aids users. Special rules and considerations apply based on specific cases and default timelines.

Capital markets regulator Sebi on Thursday launched a beta version of the settlement calculator to simplify the process of arriving at the indicative settlement amount and provide more transparency in the system.

This settlement calculator contains fields that the applicant can identify in terms of the violations. It also enables the applicant to select appropriate options with respect to their past regulatory track record on the basis of actions of Sebi as well as the details of other ongoing proceedings as on date of filing the settlement application.

Besides, a user-friendly guide video has been included in the settlement calculator for the ease of understanding the process of arriving at the indicative settlement amount.

As part of the settlement mechanism, an alleged wrongdoer can settle a pending matter with Sebi without admission or denial of guilt by paying settlement charges.

''In order to simplify and provide more transparency in the process of arriving at the indicative settlement amount in terms of the parameters laid down in the Sebi (Settlement Proceedings) Regulations, 2018, Sebi has launched the settlement calculator (Beta version),'' the regulator said in a statement.

The settlement amount (SA) will include the indicative amount (IA) based on the guidelines issued by Sebi and factors in terms of the Settlement Regulations.

Under the guidelines, IA will start with at least Rs 3 lakh for first-time applicants and Rs 7 lakh for others. A ''first-time applicant'' is one who has no prior orders or settlements with the Sebi.

Further, the indicative amount will be calculated based on per default, considering inspection reports, investigation reports, or orders from relevant authorities.

The IA will be adjusted using the Proceeding Conversion Factor (PCF) based on the case's stage. If a business changes structure or management, its record applies to the new entity. Moreover, special considerations include insolvency and management changes.

If an entity self-reports a default before a notice is issued, it gets a lower PCF, Sebi said.

If the Sebi's internal committee, or the high-powered advisory committee (HPAC) or the Panel of Whole Time Members (WTMs) see different defaults, they can modify charges. They can accept, reject, or adjust an application and settlement amount based on case specifics.

For corporate applicants, the settlement amount might be charged to responsible officers to protect investors.

Further, Sebi said that special rules apply for peculiar defaults not covered by guidelines, allowing flexibility in determining the settlement amount.

''In case of more than one proceeding arising from the same cause of action has been initiated against the applicant, the IA shall be increased by 20 per cent,'' Sebi said adding that for non-disclosure under certain regulations, the base amount can be reduced by 75 per cent.

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