SEBI Unveils New Settlement Rules, Fast-Track Route For Cases Up To ₹10 Lakh

The Securities and Exchange Board of India (SEBI) has introduced new settlement regulations aimed at simplifying the resolution of securities law violations through a revised calculation formula and faster processing of eligible cases.

According to a notification issued on Oct 6, the Settlement Regulations, 2026 establish a separate mechanism for recovering wrongful gains while introducing fast-track settlement procedures.

The changes follow approval by SEBI's board at its meeting last month.

Revises settlement amount formula

Under the revised framework, settlement terms will include the settlement amount, disgorgement of wrongful gains wherever applicable, and remedial and regulatory terms (RRT).

The regulator previously classified RRT as non-monetary terms.

Settlement amounts will now be calculated using a base figure linked to the minimum penalty prescribed for the relevant violation under securities laws.

This amount will be adjusted according to the stage of proceedings, regulatory action, seriousness of the violation, aggravating and mitigating circumstances, and legal costs.

Importantly, wrongful gains, avoided losses and losses caused to investors will not form part of the base amount.

Where these amounts can be quantified, SEBI will recover them separately through disgorgement.

The change is intended to eliminate double counting when determining settlement obligations.

Fast-track settlement for cases up to ₹10 lakh

SEBI has established two accelerated settlement categories: monetary threshold-based and violation-based fast-track settlements.

Under the monetary threshold mechanism, eligible cases involving settlement amounts not exceeding Rs10 lakh will proceed directly from the internal committee to a panel of whole-time members.

For specified violations, including certain disclosure-related breaches, SEBI may issue notices offering entities an opportunity to settle by paying the stated amount.

The panel will issue the settlement order after receiving payment.

The regulations also allow settlement of matters involving financial statement misrepresentation or diversion of funds, subject to appropriate corrective measures.

These may include additional disclosures and recovery of diverted funds.

SEBI expects the revised framework to improve transparency, predictability and efficiency while reducing discretion in settlement decisions.

The regulator also aims to resolve less serious matters more quickly without weakening deterrence against securities law violations.