Sep 30, 2019

Factors for SEBI Granting Confidentiality in Settlement Applications

SEBI has issued a circular setting out the criteria to assure confidentiality under the SEBI (Settlement Proceedings Regulations, 2018 (‘Settlement Regulations’). A person who may have committed a violation of securities laws (other than those detailed in Tables VII to IX of Schedule II of the Settlement Regulations), may make full disclosure of such violation and also provide substantial assistance in examination/ investigation/ inspection/ inquiry/ audit/ any other proceedings (‘Examination Proceedings’) that is initiated/ is ongoing/ yet to be initiated by SEBI against any person for violation of the securities laws, for the purpose of seeking grant of confidentiality.

For the purposes of approving the request for confidentiality, SEBI may assess the information/ assistance/ cooperation rendered during the Examination Proceedings including, inter alia, the assistance provided by the applicant and the gravity of the subject matter in question. Further, SEBI has also set out factors which would adversely affect the applicant’s claim for confidentiality, which include, inter alia, past history of securities laws violations by the applicant, extent of involvement of the applicant in the violation of securities laws (assessed in the context of the individual’s knowledge and position of responsibility at the relevant time), the degree to which the applicant tolerated illegal activity, plausibility of the reasons for the applicant to delay reporting of the violations of the securities laws and efforts undertaken by the applicant to remediate/ mitigate/ indemnify the harm caused by the violations.

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