| Sebi could allow settlement before showcause notices |
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JAYSHREE P UPADHYAY Mumbai, 18 November The Securities and Exchange Board of India ( Sebi) is learnt to be working on facilitating settlement of enforcement proceedings even before formal showcause notices are issued. According to people privy to the matter, the regulator is considering a mechanism through which it would send its basic findings to the entity under scrutiny, by way of a basic notice, before issuing aformal enforcement showcause notice. The basic notice will ask if the entity wishes to settle the proceedings through the consent mechanism. A plan to this effect is likely to be discussed at a meeting of the Sebi board here on Wednesday. "By way of this notice, we will let the parties know that they can approach us for settlement of the matter by way of consent," said an official. The basic intimation notice with respect to enforcement would be delivered to the parties concerned after approval from a Sebi whole- time member. The parties would then have to approach the regulator within 60 days to settle enforcement proceedings, said sources. A consent order allows an entity prima facie found to be violating securities laws to settle proceedings with the regulator. This settlement is done without accepting or denying the charges. As part of the current practice, asettlement of civil proceedings begins after the issue of a showcause notice, as parties become aware of probable action only after that. The markets regulator's likely move could be meant to save on cost and time. " The issue of a basic notice will reduce the cost incurred by Sebi, and also save time," said a source. After a showcause notice is issued and the reply filed by the entity concerned is examined, a personal hearing takes place. After that, a final order is prepared. Any order — consent, or for dropping of charges, or a final one — is generally put by Sebi in the public domain. Some fear that these matters, if disposed of at the preliminary stage, would not be put in the public domain and, thereby, make such proceedings less transparent. Turn to Page II, 3 > ON SEBI'S TABLE Agenda for Wednesday's board meeting |To facilitate consent proceedings before issue of formal showcause notices |To send basic intimation notice about probable action |To also clear insider- trading regulation, delisting regulation, listing regulation, discussion paper on wilful defaulters and promoterpublic reclassification |Companies to reply to basic notice, if applying for consent in 60 days |
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