Sebi permits compounding of offences

Sebi permits compounding of offences
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First Published: Fri, Apr 20 2007. 11 54 PM IST
Updated: Fri, Apr 20 2007. 11 54 PM IST
PTI
Mumbai: Inspired by the US market regulator, Sebi on 20 April announced a new system for settling disputes under which it can slap penalties on defaulters without taking recourse to long drawn litigation in courts.
Defaulters of securities laws can now approach the Securities and Exchange Board of India’s high powered committee, to be headed by a retired High Court judge, for compounding of offences to obtain what is called a consent order.
The order will provide the regulator flexibility of enforcement actions to impose adequate sanction and create sufficient deterrence.
The committee, while approving the Consent Order sought by a defaulter, will consider factors such as object of the violated law, interest of investors and securities market.
It will also consider factors like gravity of charge, nature of violation, whether the violation was intentional, party’s conduct during investigation, history of non- compliance, benefits accruing for delaying compliance, while approving the consent order, said the Sebi guidelines.
The parties can request for Consent Orders, which will include remedial action and payment of consent penalties, in cases where the proceedings are pending or are likely to be instituted.
The guidelines also allow the Committee to revise the terms of consent orders proposed by defaulters if they are found inadequate in light of the gravity of offences committed.
The US Securities and Exchange Commission, the Sebi circular said, “settles a substantial number (over 90%) of administrative/civil cases by consent orders.”
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First Published: Fri, Apr 20 2007. 11 54 PM IST
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