SEBI notifies new settlement rules and fast-track process

The Securities and Exchange Board of India (SEBI) has notified the Settlement Regulations, 2026, introducing a revised formula for calculating settlement amounts and a fast-track route for specific cases. The new framework aims to make the settlement process simpler, more transparent, and more predictable.

Under the new rules, the calculation of settlement amounts will be based on a base amount linked to the minimum penalty prescribed for a violation. This base amount will be adjusted according to factors such as the stage of proceedings, the gravity of the violation, aggravating or mitigating circumstances, and legal costs. To prevent double counting, the disgorgement of wrongful gains, losses avoided, or losses caused to investors will be calculated and recovered separately from the settlement amount.

SEBI has also established two types of fast-track settlement processes: violation-based and monetary-threshold-based. For cases where the settlement amount is Rs 10 lakh or less, the process will move directly from an internal committee to a panel of whole-time members. The regulations also cover cases involving the misuse of funds or incorrect information in financial statements, provided that necessary remedial and regulatory measures are taken.