Markets regulator SEBI has notified new regulations that revise how settlement amounts are calculated, and introduced a fast‑track route for lower‑value cases up to Rs 10 lakh.
The revised formula for settlements and fast-track route aims to make the framework simpler and more predictable, the regulator said in a notification.
Under the Settlement Regulations, 2026, settlement terms will comprise the settlement amount, disgorgement of wrongful gains where applicable, and remedial and regulatory terms (previously called non‑monetary terms).
It separately provides for disgorgement of wrongful gains, avoiding such amounts being double counted when calculating settlement.
The new formula ties the settlement amount to a base amount linked to the minimum penalty prescribed for the violation under securities laws. Stage of proceedings, regulatory action, gravity of the violation, aggravating factors and mitigating factors will decide the base amount, besides legal costs involved.
While wrongful gains, loss avoided or loss caused to investors are avoided from calculation of base amount, they will instead be disgorged separately.
Besides monetary thresholds, the nature of violations, including certain disclosure-related violations, will decide whether the cases will take the newly introduced fast-track settlement route.
“Fast track settlement shall be of two types — violation-based fast track settlement and monetary threshold based fast track settlement,” the regulator said as per reports.
When the settlement amount is below or equal to Rs 10 lakh, the cases will move directly from the internal committee to a panel of whole-time members.
SEBI will issue a notice to the entity in the violation-based fast-track settlements offering an opportunity to settle the matter by paying the amount specified in the notice. Panel of members will pass the settlement order after payment of the settlement amount.
The regulations also cover settlement of cases involving misrepresentation of financial statements or diversion of funds, subject to appropriate remedial and regulatory measures, including disclosures and retrieving diverted funds.
