SEBI has recently issued the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014 with retrospective effect from April 20, 2007 rescinding the earlier circulars on the same issue.
The Regulations lay down the substantive procedure for settlement of administrative and civil proceedings. It provides for settlement in monetary as well as non-monetary terms or a combination of both, in accordance with the guidelines issued thereunder to arrive at settlement terms. It also lays down factors which shall be considered to arrive at the settlement terms. Serious offenses like insider trading and fraudulent and unfair trade practices, including front running, which could potentially affect the whole market or cause substantial losses to or affect the rights of retail and small investors cannot be settled under the Regulations.
However, a small window has been left open for settlement with applicants who intend to make good the losses caused to the investors. Other offenses like failure to make open offer, defaults or manipulative trade practices by mutual funds, AIFs, CISs and their sponsors or AMCs, managers, trustees are also not consentable unless the applicant makes good the losses suffered by investors.
