SEBI Introduces Revised Settlement Rules, Fast-Track Route for Cases Up to ₹10 Lakh

The new framework revises the calculation of settlement amounts, separates disgorgement of wrongful gains and aims to make the resolution process simpler and more predictable.

The Securities and Exchange Board of India (SEBI) has notified new settlement regulations that revise the formula for calculating settlement amounts and introduce a fast-track mechanism for cases involving amounts of up to ₹10 lakh.

Under the SEBI (Settlement Proceedings) Regulations, 2026, settlement terms will include the settlement amount, disgorgement of wrongful gains wherever applicable, and remedial and regulatory conditions. The latter replaces the earlier term “non-monetary terms”.

According to the regulator’s notification, the revised framework aims to simplify the settlement process and make outcomes more predictable.

Revised formula to determine settlement amounts

Under the new rules, the settlement amount will be calculated using a base amount linked to the minimum penalty prescribed for the relevant violation under securities laws.

The calculation will take into account factors such as the stage of proceedings, regulatory action, seriousness of the violation, aggravating and mitigating circumstances, and legal costs.

Wrongful gains, losses avoided and losses caused to investors will be excluded from the calculation of the base amount. Instead, applicable wrongful gains will be recovered separately through disgorgement, helping prevent the same amount from being counted twice.

Fast-track settlement introduced for cases up to ₹10 lakh

The regulations introduce two categories of fast-track settlement: violation-based fast-track settlement and monetary-threshold-based fast-track settlement.

In cases where the settlement amount is ₹10 lakh or less, the matter will move directly from the internal committee to a panel of SEBI’s whole-time members, bypassing the usual stages of consideration.

The regulator will issue a notice in violation-based fast-track cases, offering the concerned entity an opportunity to settle the matter by paying the specified amount. Once payment is made, the panel of members will pass the settlement order.

Eligibility for the fast-track route will depend not only on the monetary threshold but also on the nature of the violation. Certain disclosure-related violations may also qualify under the framework.

Financial misrepresentation and fund diversion cases covered

The new regulations also provide for the settlement of cases involving misrepresentation of financial statements or diversion of funds, subject to appropriate remedial and regulatory measures.

These measures may include making necessary disclosures and taking steps to recover diverted funds, as applicable.