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Nearly 300 consent applications pending with Sebi

Press Trust of India/New Delhi 10 Jul 12 | 07:02 PM

Market regulator Sebi has got nearly 300 applications from various entities pending with it for settlement of various probes through its 'consent' mechanism, an out-of-court-like procedure.

Securities and Exchange Board of India (Sebi), which recently changed the contours of its consent procedure, has also rejected over 800 such settlement applications on different grounds since the mechanism was introduced in 2007.

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As per the latest data provided by Sebi, it had 298 consent applications pending as on March 31, 2012. Since then, Sebi has passed an estimated ten consent orders, while a few new ones have also been received by it.

Under the consent mechanism, the entities being probed by Sebi pays 'settlement' charges, as also legal and administrative expenses, without admission or denial of charges.

The settlement charges thus collected are remitted to the Consolidated Fund of India.

The total amount received under the consent procedures so far has exceeded Rs 200 crore, while Sebi has disposed off more than 1,100 cases through this mechanism so far.

Besides the payment of these charges, the settlement in 142 cases so far included penalties like debarment from dealing in securities market and suspension of certificate of registration for different periods.

Till March 2012, Sebi had approved 1,186 applications settling various kinds of enforcement actions. These include 75 consent applications where consent orders were passed by the Securities Appellate Tribunal (SAT) and the Supreme Court.

The number also includes 70 compounding applications where the compounding orders were passed by the respective criminal courts.

Sebi has also rejected 817 applications and declined to pass consent orders for various reasons, including the reason that the terms of settlement proposed by the applicants were not found adequate by the HPAC (High Powered Advisory Committee of Sebi).

Similarly, Sebi did not accept compounding proposals in 26 cases.
Sebi updated its board about the consent process and related statistics during its last meeting on June 26.

Earlier in May this year, Sebi streamlined its consent procedure, which was first introduced in April 2007.

As per the new rules, certain defaults including insider trading, front running, failure to make an open offer, redress investor grievances and respond to the summons issued by Sebi have been excluded from the consent process.

The defaults falling in the category of fraudulent and unfair trade practices, which in the opinion of Sebi are very serious which could have caused substantial losses to the investors, would also not be consented.

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