The Securities and Exchange Board of India (SEBI) has notified the Settlement Regulations, 2026, revising the formula for calculating settlement amounts and introducing a fast-track mechanism for eligible cases involving amounts of up to ₹10 lakh.
According to the market regulator, the revised framework aims to simplify settlement procedures and make the process more transparent and predictable.
Under the new regulations, settlement terms will comprise the settlement amount, disgorgement of wrongful gains wherever applicable, and remedial and regulatory measures, previously referred to as non-monetary terms.
The revised framework separately accounts for the disgorgement of wrongful gains to prevent such amounts from being counted twice while calculating the settlement amount.
Under the new formula, the settlement amount will be linked to a base amount determined with reference to the minimum penalty prescribed for the relevant violation under securities laws. Factors such as the stage of proceedings, regulatory action, gravity of the violation, aggravating and mitigating circumstances, and legal costs will also be considered.
Wrongful gains, losses avoided and losses caused to investors will be excluded from the calculation of the base amount and dealt with separately through disgorgement, wherever applicable.
The regulations also introduce two categories of fast-track settlements: violation-based fast-track settlement and monetary threshold-based fast-track settlement.
In cases where the settlement amount is ₹10 lakh or less, the matter will move directly from the internal committee to a panel of SEBI’s whole-time members, under the prescribed process.
For violation-based fast-track settlements, SEBI will issue a notice offering the concerned entity an opportunity to settle the matter by paying the amount specified in the notice. The settlement order will be passed by the panel after the payment is made.
Eligibility for the fast-track mechanism will depend not only on the monetary threshold but also on the nature of the violation, including certain disclosure-related breaches.
The regulations also provide for the settlement of cases involving misrepresentation of financial statements or diversion of funds, subject to appropriate remedial and regulatory measures. These may include disclosure requirements and measures to recover diverted funds.
-IANS
