Ravi Mehta, a prominent investor in the Indian securities market, has been accused of violating the Securities and Exchange Board of India (SEBI) regulations. SEBI found that he had indulged in insider trading by accessi

CS Professional · Drafting, Pleadings and Appearances · PYQS · June 2025
Ravi Mehta, a prominent investor in the Indian securities market, has been accused of violating the Securities and Exchange Board of India (SEBI) regulations. SEBI found that he had indulged in insider trading by accessing unpublished price-sensitive information regarding a merger between two listed companies and making profits from the illegal trade. This activity was discovered when SEBI analyzed his trading patterns and found unusual transactions in shares of the two companies just before the merger announcement. SEBI initiated an investigation under Section 11B of the Securities and Exchange Board of India Act, 1992, along with relevant provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015. After completing the investigation, SEBI issued a show-cause notice to Ravi Mehta, alleging that he had violated regulations by trading based on State Industrial Corporation. Ravi Mehta, realizing the potential consequences of the charges, including penalties, suspension, and even a ban on trading in the securities market, opts to resolve the matter through settlement proceedings under the SEBI (Settlement Proceedings) Regulations, 2018. He expresses his intention to settle the matter without admitting or denying the charges but is willing to pay a settlement amount and adhere to specific conditions set by SEBI. The Settlement Officer of SEBI reviews Ravi Mehta's application for settlement under the SEBI (Settlement Proceedings) Regulations, 2018, which offers the opportunity for an expedited resolution of matters involving violations of securities laws, subject to payment of a settlement amount, and without further legal proceedings. In view of the above facts, answer the following questions: What is the process for initiating settlement proceedings under SEBI (Settlement Proceedings) Regulations, 2018?

Answer & Explanation:

Process of Initiating Settlement Proceedings Application: A person against whom any specified proceedings have been initiated and are pending or may be initiated, may make an application to SEBI in the Form specified in Part-A of the Schedule-I. The application shall be accompanied by a non-refundable application fee as specified in Part-B of Schedule I and the undertakings and waivers as specified in Part-C of Schedule-I. Application by association or a firm or a body corporate or a limited liability partnership: Where the applicant is an association or a firm or a body corporate or a limited liability partnership, the application and undertakings and waivers shall be executed by the person in charge of, and responsible for the conduct of the business of such firm or association or body corporate and the same shall bind the firm or association, the body corporate and any officer who is in default. Procedural Aspects: An application shall be referred to an Internal Committee to examine whether the proceedings may be settled and if so to determine the settlement terms in accordance with these regulations. The proposed settlement terms, if any, shall be placed before the High Powered Advisory Committee (HPAC). The recommendations of the High Powered Advisory Committee shall be placed before the Panel of Whole Time Members. Notice by Whole-time Member (WTM): Where the Panel of Whole Time Members accepts the recommendation of the High Powered Advisory Committee to settle the specified proceedings, the applicant shall be issued a notice of demand within seven working days of the decision of the panel. Payment of Settlement Amount: The applicant shall remit the settlement amount forming part of the settlement terms, not later than thirty calendar days from the date of receipt of the notice of demand.

Topics: Securities Law

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