Are you facing Sebi action for indulging in insider trading? There’s a way to get out of the lengthy legal hassles.

Market intermediaries accused of violating various Sebi guidelines can get out of the hook by opting for a legal process called compounding of offences, under which the accused pays compounding charges instead of facing the consequences of prosecution.

Initiating the process, a Sebi note says, “Section 24A of the Sebi Act permits compounding of offences by the court where prosecution proceedings are pending.” Compounding of offence allows the accused to avoid criminal prosecution, which would save costs, time and mental agony in return for payment of compounding charges.

Companies that violate the Companies Act laws are already enjoying this facility. Explaining the compounding process, Sebi said: “The accused has to submit his proposal before a court where the prosecution is pending. After taking necessary orders from the court, Sebi’s internal committee will examine the compounding proposal and file its reply to the court after taking approval from the Competent Authority of Sebi.”

Simultaneously, the market regulator is also introducing the system of consent orders. “A consent order provides flexibility of a wider array of enforcement and remedial actions, which will achieve the twin goals of appropriate sanction, remedy and deterrence without resorting to litigation, lengthy proceedings and consequent delays,” Sebi said.

Consent orders can be passed in respect of all types of enforcement or remedial actions, including administrative proceedings and civil actions, eg proceedings under Sections 11, 11A(1)(b), 11B and 11D of the Sebi Act or under the Enquiry Proceedings Regulations or Adjudication Rules or equivalent proceedings under the Securities Contracts (Regulation) Act (1956), Depositories Act (1996) and other civil matters pending before SAT/ courts.

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