Indian Regulator Eliminates a Settlement Option

In 1997, the Securities and Exchange Board of India established a process modeled on the U.S. practice of allowing alleged violators of Securities and Exchange Commission regulations to settle their cases without admitting or denying the allegations. Now SEBI is abolishing this option for many cases, the Deccan Herald reports.

This kind of settlement may impose penalties on those who haven't violated the rules, because it does not require that the violation be admitted, let alone proved; on the other hand, a settled allegation presumably costs the alleged offender less than he, she or it would end up paying if the regulator won in court.

The U.S. practice has been called into question, with U.S. District Judge Jed S. Rakoff rejecting a settlement between the SEC and Citigroup. But in March, the Second Circuit delayed the trial in that case in order to allow the parties to argue that the settlement should be accepted, and this month officials from the SEC and other agencies defended the practice before a Congressional committee.

‍