SEBI’s new settlement rules change how pending applications are handled

Background

When SEBI suspects a breach of securities law, it can investigate and begin enforcement proceedings. A show-cause notice sets out the alleged breach and asks the person concerned to respond. The regulator can then decide what action the evidence supports. Its decisions can also reach the Securities Appellate Tribunal or the Supreme Court through appeals. Settlement offers another way to resolve eligible proceedings. The applicant proposes terms, and SEBI examines whether to accept them. Those terms can include a payment, returning wrongful gains and measures to correct the conduct. This makes settlement a regulated decision about resolving a case, rather than a payment that automatically ends any allegation. SEBI used the 2018 settlement regulations before the new code took effect. The change therefore has to account for applications already partway through review. An internal committee examines proposed terms, and a High Powered Advisory Committee makes recommendations in the ordinary process. A panel of SEBI’s whole-time members decides whether to accept the settlement. The transition rules use these stages to determine what happens to pending applications. The new framework also provides a faster route for certain cases. One route covers settlement amounts up to ₹10 lakh where no return of wrongful gains is needed. It also requires the absence of other corrective or regulatory conditions. Such applications can go from the internal committee directly to the decision-making panel. Separate provisions cover specified disclosure-related breaches.

How it developed

1. 8 October 2026
   How it started

   SEBI notifies a replacement for its 2018 settlement code

   SEBI notified the new settlement regulations on 8 October 2026. They cover eligible administrative and civil proceedings under securities laws. The framework sets out applications, review stages, settlement terms and exclusions. The rules exclude specified categories, including wilful defaulters, fraudulent borrowers and fugitive economic offenders. SEBI may also decline settlement where an alleged breach has wider market effects or harms many investors. Eligibility and approval therefore remain part of the process.

   SEBI / Gazette of IndiaANI / Moneycontrol
2. 7 November 2026
   New fact

   Pending applications follow different routes as the new code takes effect

   Some pending applications already had terms approved by the whole-time-member panel. They continue under those approved terms and the 2018 rules. Where the advisory committee had recommended terms but the panel had not approved them, the applicant receives a choice. The applicant has 30 days from receiving SEBI’s notice to choose the old recommended amount or a fresh process. Applications that had not reached an advisory recommendation move to the 2026 rules, with a fresh internal-committee meeting. These distinctions preserve completed decision stages while setting a route for unfinished applications. SEBI’s accompanying facilities include online filing, explanatory FAQs and a settlement-amount calculator.

   SEBISEBIANI / Moneycontrol

Key terms