Violating securities law? Sebi to fine

MUMBAI: Seeking to avoid lengthy court battles with those violating securities law, market regulator Sebi has proposed a system that would let the accused settle disputes out of court, albeit after payment of a hefty fine.

The system called 'Consent Orders' would "achieve goals of an appropriate sanction, remedy and deterrance without resorting to litigation, lengthy proceedings and the resultant delays," the Securities and Exchange Board of India has said.

It had announced yesterday that it would introduce consent orders for all matters pending before Securities Appellate Tribunals or courts.

It would also allow compounding of offence, whereby an accused would pay compounding charges instead of undergoing consequences of prosecution.

Compounding of offence would allow the accused avoid a lengthy process of criminal prosecution which would save cost, time and mental agony in return for payment of compounding charges, the capital market watchdog said.

Incidentally, consent orders can be passed in respect of all types of enforcement or remedial actions and any person, who is notified that a proceeding would be initiated against him, can propose settlement of the case through consent orders.

Sebi said consent orders, as also compounding of offence, would be issued after taking into consideration things like whether the violation was intentional, gravity of charge, history of non-compliance and economic benefits accruing to the party concerned.

The regulator said that consent orders can be passed at any stage where probable cause of violation has been found.

However, before that an internal committee of Sebi would submit its views to the competent authority\adjudicating officer where proceedings were pending.

As regards compounding of offence, the accused will need to submit his proposal before the court where the prosecution is pending.

Sebi said while considering the proposal of the party concerned, it would obtain a waiver from the party from taking any legal proceedings against Sebi concerning any of the issues covered by the consent orders.

According to the regulator, the charges payable by the party in case of compounding of charges would depend on the gravity of violation.

The party will also be liable to pay legal expenses incurred by Sebi in pending prosecution cases as also those pending before SAT\courts.