The Securities and Exchange Board of India (SEBI) on August 14, 2026, issued the Consultation Paper on Review of SEBI (Settlement Proceedings) Regulations, 2018.
The following has been stated namely: -
• SEBI is proposing a new settlement framework through the draft SEBI (Settlement of Proceedings) Regulations, 2026, replacing the existing 2018 regulations.
• The objective is to simplify the settlement mechanism, reduce litigation, provide an alternative to prolonged enforcement proceedings, and make the process more transparent and easier to understand.
• In cases where settlement was rejected/withdrawn and penalties were subsequently imposed, the proposed settlement amount was, on average, about 8 times the final penalty.
• SEBI aims to bring this ratio down to approximately 4 times the eventual penalty, making settlement more reasonable while retaining sufficient deterrence against violations and fraud.
• SEBI has been urged to make settlement more attractive, including through special/one-time settlement schemes, to encourage entities to resolve cases and reduce the backlog of pending proceedings.
• Stakeholders and the public can submit comments on the draft Settlement Regulations, 2026 by September 04, 2026. The proposals remain subject to modification after public feedback and SEBI's internal review.
