Market regulator SEBI has notified new regulations that provide a revised formula for calculating settlement amounts and a fast-track route for cases involving settlement amounts of up to Rs 10 lakh.
The new framework separately provides for disgorgement of wrongful gains, loss avoided, or loss caused to investors, removing the existing double counting of such amounts when calculating settlement terms.
Under the new framework, settlement terms will comprise the settlement amount, disgorgement of wrongful gains, wherever applicable, and remedial and regulatory terms (RRT), earlier referred to as non-monetary terms, according to a notification dated October 6.
The new formula for calculating the settlement amount will be based on a base amount linked to the minimum penalty prescribed for the violation under securities laws. The base amount will be adjusted using factors related to the stage of proceedings, regulatory action, gravity of the violation, aggravating factors and mitigating factors, besides legal costs.
SEBI said wrongful gains, loss avoided or loss caused to investors will not be included while determining the base amount. Such amounts, where quantified, will instead be disgorged separately.