FAQs on SEBI Settlement Scheme 2020

What is Settlement Scheme 2020 all about?

SEBI came across several instances where a set of entities were consistantly making losses while other set of entities were consistantly making profits by executing reversed trades amongst themselves during the period April 1, 2014 to September 30, 2015. 14720 entities were involved in this activity as per SEBI. With an intention to allow one time Settlement opportunity to these entities, SEBI has come up with " Settlement Scheme 2020".

Using this scheme, the Noticees may settle the matter in terms of Regulation 26 of SEBI (Settlement Proceedings) Regulations 2018.

How does one know if he is a Noticee about in the current proceeding?

SEBI has issued letters to all the entities against whom proceeding is in progress. Given below is a sample letter issued by SEBI.

Can I check on SEBI website whether I am a party to the proceeding?

Yes you can check the website of SEBI to see if you are a party to the proceeding through following steps:

  1. Visit " Penalty Payment" page of SEBI.
  2. Select "Settlement Scheme" in "Type of Category" drop down.
  3. Enter your PAN and Capcha then press "Go".
  4. Your Name, Entity Type, Number of contracts reversed and Artificial volume of trades will be displayed.
  5. Click on Check Box on the left of "I agree......"
  6. You will be able to see the Settlement Amount, Registration Fee and Total Amount payable by you for settlement.

Where do I get the format of Undertaking & Waivers?

The format of "Undertakings & Waivers" is given in "Part C" of "Schedule-I" of Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018

How do I go ahead with the settlement process?

You should follow the following steps:

  1. Upload duly executed and notarised "Undertaking & Waivers" as per regulations and keep a scanned copy thereof ready in PDF form.

  2. Upload "PAN"

  3. Upload "Last 3 years ITR"

  4. Pay "Registration Fee"

  5. Pay "Settlemement Amount"

How can SecMark help me in the settlement process?

The process is very simple and you generally do not need any assistance for it.

However if you still need assistance, SecMark can draft "Undertaking and Waivers" for you and upload documents for you after which payment can be made from your bank account.

What happens if I do not accept the settlement scheme and do not make payment?

Availing offer of settlement is completely voluntary.

If you choose not to settle under the current offer for settlement then SEBI will issue a Show Cause Notice to you.

Once you receive the Show Cause Notice you should file a reply and avail an opportunity of personal hearing where you can represent yourself or can appoint an authorised representative to represent your case.

If SEBI finds merits in your submission, you will be exonerated of the charges and if SEBI is not satisfied with your submission, it will levy some penalty upon you.

Can SecMark assist me in responding to Show Cause Notice of SEBI and Representation?

Yes, upon receipt of the Show Cause Notice, SecMark can assist you with filing a reply on merits and authorised representatives can be appointed by you for representing your case before SEBI.

Has SEBI disposed off similar matters earlier? What is the action from SEBI in such matters?

Yes, SEBI has disposed off several similar matters.

SEBI has issued Show Cause Notice to 567 entities who did maximum reversal trades and if you are not one of them, you can believe that your transactions are lesser than these 567 entities.

SEBI has issued many orders in these 567 cases and the penalty is in the range of Rs. 5 to 25 lakhs in many cases. In most cases the penalty amount is Rs. 5 Lakhs.

So you have a reasonable ground to believe that you may not be penalised more than Rs. 5 Lakhs in the proceedings, thought it cannot be guaranteed.

Some sample cases where penalty of Rs. 5 lakhs is levied are given hereunder:

  1. Evergreen Technologies Limited.

  2. Gladiatory Vyapar Private Limited.

  3. IM+ Investments & Capital Private Limited.
  4. Lend Lease Company India Limited.
  5. Pilot Consultants Private Limited.

You can compare your alleged volumes with the above orders to have an idea of possible penalty for your matter.

Where do I get clarifications regarding the calculation of amount etc.?

You can write to Shri Ashok Jumar J, DGM at SEBI on ashokkj@sebi.gov.in or call on +912226449352 for any clarifications regarding the scheme.