SEBI Settlement Mechanism: Delays, Costs and Criticism
Why in the news
SEBI’s settlement route, meant to resolve securities law violations faster than court litigation, is being called slow, opaque and costly.
Key facts
- Purpose: quicker resolution of violations and less litigation.
- Criticism: delays, discretionary practices, inflated amounts and strict non-monetary terms; settlement often costs more than litigation.
- Enforcement orders that came via settlement rose from 10% to 45% in five years.
Data snapshot
| Item | Figure |
|---|---|
| Collections FY25 (to 15 March) | ₹851 crore, including the ₹643-crore NSE case |
| Pending applications | 137 (FY23), 289 (end-FY24) |
| New applications | 386 (FY23), 434 (FY24) |
Amount calculation and structure
- The formula uses base amounts, conversion and regulatory action factors; critics call the base values loosely relevant and see little room to negotiate.
- Internal Committee: officer of at least chief general manager rank.
- High-Powered Advisory Committee: a former Supreme Court or High Court judge plus three outside market experts.
- Final approval: a panel of SEBI whole-time members.
Concerns and reform
- Non-monetary terms such as compliance undertakings and voluntary debarment go beyond the original show cause notices.
- A standard operating procedure is being drafted, as whole-time member Kamlesh Chandra Varshney said.
Exam angle
- Internal Committee rank: not below chief general manager.
- Advisory committee: ex-judge plus three experts.