SEBI prescribes factors for assuring confidentiality in a settlement application filed under SEBI (Settlement Proceedings) Regulations, 2018

Jun 20, 2019 | by Avantis RegTech Legal Research Team


The Securities and Exchange Board of India (SEBI) on June 18, 2019, has issued a Circular in order to prescribe certain factors for assuring confidentiality in a settlement application under the SEBI (Settlement Proceedings) Regulations, 2018. Under Chapter IX of the Settlement Proceedings Regulations, 2018, any person who have committed a violation of securities laws, may make full disclosure of such violation and also provide substantial assistance in examination or investigation or inspection or inquiry or audit or any other proceedings that is initiated or ongoing or yet to be initiated by the Board, against any person in respect of violation of the securities laws for the purpose of seeking grant of confidentiality and reduced settlement charges.

The Board may assess the information rendered during such examination proceedings in order to assure confidentiality to an applicant who provides assistance in examination proceedings, by considering the following factors:-

1)Assistance provided by the applicant

2)Gravity of the subject matter:- 

a.The nature and type of defaults under the securities laws; 

b.The age and repetitive nature of defaults. 

c.The adverse effect upon investors due to the defaults involved.

3)Factors which may adversely affect the applicant’s claim for confidentiality:- 

(i)Past history of securities laws violations by the applicant; 

(ii)The extent of involvement of the applicant in the violation of securities laws assessed in the context of the individual’s knowledge and position of responsibility at the relevant time;

(iii)The degree to which the applicant tolerated illegal activity;

(iv)The applicant ought to have exercised a higher standard of diligence but failed to do so;

(v)The plausibility of the reasons for the applicant to delay reporting of the violations of the securities laws;

(vi)The degree to which the applicant knowingly interfered with an entity’s established legal, compliance or audit procedures to prevent or delay detection of the reported violation; 

(vii)The efforts undertaken by the applicant to remediate/mitigate/indemnify the harm caused by the violations; 

(viii)The sanctions imposed on the applicant by other Central or State authorities and industry organizations for the defaults which are the subject matter in the examination proceedings;

[Circular No. SEBI/HO/EFD2/CSD/CIR/P/2019/0000000072]

Click here to download the Circular.

 


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