Over 1,000 cases solved through consent order: Sebi

At present,the stock market regulator is going slow on the consent mechanism after the Delhi High Court sent a notice to Sebi on the public interest litigation. The PIL had said that the regulator did not have the authority to issue such a circular since it violated several sections of the Sebi Act.

These sections required Sebi to mandatorily impose a penalty after it established violation of securities laws by the accused.

People close to the development say that Delhi High Court has told Sebi that it can go ahead with the process but the decisions will be subject to the outcome of Court’s decision on the petition. “Sebi is telling the parties that there will be a likely ruling from court and subject to that ruling if you are willing to settle under consent then a settlement can be arrived at,” said a former whole time member of Sebi.

“As on September 30,2011,a total of 246 consent applications are pending,” said Sebi in response to queries by The Indian Express under the Right to Information Act.

Responding to the queries,the regulator said it had received a total of 2,462 applications for consent between April 2007 and September 2011. It has disposed 1,099 applications by passing consent orders. It rejected 798 applications for consent and 299 applications have been treated as withdrawn,infructuous and closed.

Over the years,the number of applications for consent has dropped from over 650 in the financial years 2008-09 and 2009-10,to 333 in 2010-11 and 166 in the first six months of 2011-12. The money collected by Sebi through this has nevertheless risen sharply. As against a collection of Rs 45.7 crore in 2008-09,Sebi collected Rs 68.5 crore and Rs 72.1 crore under consent mechanism in the fiscal 2010 and 2011,respectively.

While the process may be awaiting the Delhi High Court’s ruling on its legal validity,experts said it is unlikely the ruling will go against the mechanism.

“The Supreme Court,high court and the Securities Appellate Tribunal have approved the process earlier. It is not easy to disturb it,” said a source close to the development.