June 20, 2019

SEBI Circular Sets New Rules, Lists Factors Which Could Affect Applicant Claim For Confidentiality During Resolution Process

[ By Bobby Anthony ]


A recent circular issued by the Securities & Exchange Board of India (SEBI) has set various grounds on the basis of which applicants could be assured of confidentiality while filing a plea under the settlement mechanism.

The capital markets regulator also listed factors which could adversely affect applicants’ claims for confidentiality.

The circular stated that SEBI may assess the information given by the applicant, as well as the assistance or co-operation rendered during examination proceedings by considering various factors such as nature of assistance provided and the gravity of the matter.

The capital market regulator would also assess whether the co-operation was provided before the applicant had knowledge of any pending proceedings, before deciding about the applicant’s claim for confidentiality.

Also assessed would be other factors like whether the provided information was truthful, complete and reliable, the SEBI circular stated.

According to the circular, while recognizing the gravity of matter, factors like nature and type of defaults under the securities laws, age of applicant, repetitive nature of defaults and the effect of defaults on investors would also be considered.

The SEBI circular also laid down the grounds for rejection of confidentiality stating that the history of securities laws' violations by the applicant, and the plausibility of reasons for the applicant to delay reporting of violations of securities laws, among other factors, would be taken into account.

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