Insider trading, serious offences out of Sebi's consent norms

Taking a tough stand on insider trading and other serious offences, market regulator Sebi on Friday decided to exclude these violations from the consent order, a window available for settling disputes on payment of a fee.

The modified guidelines, issued by the Securities and Exchange Board of India (Sebi), also said that this window will only apply for offences committed two years prior to submission of application to Sebi for a consent order.

"Certain defaults including insider trading, front running, failure to make an open offer, redress investor grievances and respond to the summons issued by SEBI, are excluded from the consent process," Sebi said.

Besides, serious fraudulent and unfair trade practices, which have caused substantial losses to the investors, will also be kept out of the consent order.

"The new guidelines will give more clarity and transparency to consent order mechanism," SMC Global Securities Research Head Jagannadham Thunuguntla said.

Sebi introduced consent settlement system in April, 2007, with a view to cut down on its costs, time and efforts in taking up the enforcement actions. So far, the regulator has passed more than 1,000 consent orders.

According to the new guidelines, if an applicant has obtained more than two consent orders, he will not be eligible to file consent application for three years from the date of the last order.