Sebi says no consent orders for insider trading,front running

The Securities and Exchange Board of India (Sebi) has decided to keep insider trading violations out of the ambit of the consent order mechanism. The regulator has also excluded certain other defaults including front running,failure to make an open offer,redress investor grievances and respond to the summons issued by Sebi from the consent process. “The defaults falling in the category of fraudulent and unfair trade practices,which in the opinion of Sebi are very serious and/or have caused substantial losses to the investors,will not be consented,” Sebi said in a circular on Friday. The stocks he bought for himself are later offloaded when prices go up after execution of big buy orders. According to the Sebi,no consent application will be considered,if any violation is committed within a period of two years from the date of any consent order. However,if the applicant has already obtained more than two consent orders,no consent application will be considered for a period of three years from the date of the last order,it said. Further,no consent application will be entertained by the Sebi before the completion of any investigation or inspection. In respect of proceedings pending before the Sebi,no consent application will be considered if filed after 60 days from the date of the service of the show cause notice. The HPAC (High Powered Advisory Committee) which will vet the applications will consist of a Chairman who will be a retired judge of a High Court and three other external experts. In the case of rejection of the consent application,no subsequent application with respect to the same default will be considered by the Sebi at any stage thereafter. Sebi will dispose of the consent application expeditiously preferably within a period of six months from the date of registration of the consent application,it said. Interestingly,the revised norms could have an impact on many high-profile cases,including one involving Reliance Industries (RIL),which allegedly indulged in insider trading activity in 2007. While the case is yet to be settled,it was believed this would be done through consent with a monetary penalty.