Sebi to unveil new consent order norms soon

The Securities and Exchange Board of India will soon come out with a new set of norms for consent order settlement following criticism from various quarters. Sebi also said it can consider tweaking the threshold limit of 25% for open offers under the takeover code to put at rest apprehensions that this could act as a hurdle to merger and acquisition (Mand A) activity. “The new consent order norms may be out in a few weeks,” Sebi chairman U K Sinha told reporters on the sidelines of the International Bar Association conference here. In a consent settlement,which came into existence since April,2007,the entity/firm facing a Sebi probe is allowed to pay certain fees and is subjected to some restrictions without admission or denial of alleged irregularities on its part. Sebi thereafter drops the charges. The system is modelled on plea bargaining procedures in the US market. Sebi has so far collected nearly Rs 2000000000 in fines,passing over 1,000 consent orders. Sinha himself had earlier expressed reservations about the ‘arbitrary’ way in which some serious cases were settled in the past. The system is intended to cut down costs,time and efforts in taking up the enforcement actions. Under the existing norms,Sebi can slap a penalty of Rs 250000000 or three times the amount of profit the company under probe has allegedly made from insider trading,whichever is higher. Early last year,the Anil Ambani group came out of the Sebi scanner after reportedly paying Rs 500000000 as fine for alleged malpractices in the market by two of its firms (Reliance Infrastructure and Reliance Natural Resources). Sebi has decided to revamp the settlement procedure as it faces criticism that under the current framework there is no consistency and clear-cut uniformity. (With PTI)