Revised Settlement Formula Adds Base Penalty Component, Says SEBI

SEBI’s latest amendment to the Settlement Regulations, 2026, introduces a fresh calculation method that incorporates a mandatory base amount alongside the actual settlement sum.

The base amount corresponds to the minimum penalty stipulated under securities law for a given violation. Its determination will consider legal expenses, the stage of enforcement, the regulatory response, the breach’s gravity, and any aggravating or mitigating circumstances.

Importantly, this base figure excludes ill‑gained profits, recovered losses, or damages suffered by investors. Those elements will be pursued through separate recovery channels.

The notification also clarifies that the new formula is aimed at enhancing predictability and reducing complexity in settlement assessments.

In parallel, SEBI has launched a fast‑track settlement route for cases where the settlement amount is ten lakh rupees or less. Such cases will be handled by a dedicated internal committee of whole‑time members.

For violation‑specific fast‑track settlements, the regulator will issue a notice allowing the concerned entity to settle by paying the prescribed amount. Once paid, the members’ panel will issue an official settlement order.

The updated rules also cover instances of falsified financial statements or misuse of funds, provided that corrective steps—such as proper disclosure and recovery of diverted assets—are implemented.