SEBI Introduces New Fast-Track Securities Settlement Regulations

The Securities and Exchange Board of India notified the Settlement Regulations, 2026, to simplify the resolution of securities law violations and improve transparency. The new framework replaces previous calculation methods with a formula based on the minimum penalty prescribed for a specific violation, which is then adjusted for the gravity of the offense, legal costs, and the stage of proceedings.

To prevent double counting, the regulator now treats wrongful gains, avoided losses, and losses caused to investors as separate disgorgements rather than including them in the base settlement amount. The regulations also apply to cases involving the misrepresentation of financial statements or the diversion of funds, provided the offending parties take remedial measures.

As part of the update, the regulator established two fast-track settlement routes: violation-based and monetary threshold-based. Under the monetary threshold route, cases with settlement amounts not exceeding Rs 10 lakh move directly from an internal committee to a panel of whole-time members. Violation-based settlements allow the regulator to issue notices offering entities the opportunity to settle by paying a specified amount.