(1) The settlement terms may include a settlement amount and/or non-monetary terms, in accordance with the guidelines specified in Schedule-II.
(2) The non-monetary terms may include the following:
(a) Suspension or cessation of business activities for a specified period;
(b) Exit from Management;
(c) Disgorgement on account of the action or inaction of the applicant;
(d) Refraining from acting as a partner or officer or director of an intermediary or as an officer or director of a company that has a class of securities regulated by the Board, for specified periods;
(e) Cancel securities and reduce holdings where the securities are issued fraudulently, including bonus shares received on such securities, if any, and reimburse any dividends received, etc.;
(f) Lock-in of securities;
(g) Implementation of enhanced policies and procedures to prevent future securities laws violations as well as agreeing to appoint or engage an independent consultant to review internal policies, processes and procedures;
(h) Provide enhanced training and education to employees of intermediaries and securities market infrastructure institutions;
(i) Submit to enhanced internal audit and reporting requirements.
(3) The settlement amount, excluding the legal costs and disgorged amount, shall be credited to the Consolidated Fund of India.
(4) The application fee referred to in sub-regulation (2) of regulation 3 and the legal costs, if any, forming part of the settlement amount shall be credited to the Securities and Exchange Board of India General Fund.
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Explanation. – Legal costs shall include liquidated costs, as may be determined by the Board, in respect of costs for obtaining appropriate orders from the Tribunal or Court under subregulation (2) of regulation 24.
(5) The amount of profits made or losses avoided by the applicant that may be disgorged as part of the settlement terms, shall be credited to the Investor Protection and Education Fund.
Factors to be considered to arrive at the settlement terms.
10. While arriving at the settlement terms, the factors indicated in Schedule-II may be considered, including but not limited, to the following:
(a) conduct of the applicant during the specified proceeding, investigation, inspection or audit;
(b) the role played by the applicant in case the alleged default is committed by a group of persons;
(c) nature, gravity and impact of alleged defaults;
(d) whether any other proceeding against the applicant for non-compliance of securities laws is pending or concluded;
(e) the extent of harm and/or loss to the investors’ and/or gains made by the applicant;
(f) processes that have been introduced since the alleged default to minimize future defaults or lapses;
(g) compliance schedule proposed by the applicant;
(h) economic benefits accruing to any person from the non-compliance or delayed compliance;
(i) conditions which are necessary to deter future non-compliance by the same or another person;
(j) satisfaction of claim of investors regarding payment of money due to them or delivery of securities to them;
(k) any other enforcement action that has been taken against the applicant for the same violation;
(l) any other factors necessary in the facts and circumstances of the case.
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CHAPTER V COMMITTEES High Powered Advisory Committee.