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SEBI issues FAQs for Settlement Scheme 2.0

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As discussed first on 01.08.2022 by Regstreet Law Advisors on Bar & Bench, Securities and Exchange Board of India introduced Settlement Scheme, 2022 in the illiquid stock options matter through a public notice on 19.08.2022. The article can be accessed at https://lnkd.in/dxnHKKbU

The matter arose when SEBI found out that out of 21,652 entities who traded on BSEIndia (BSE) Stock Options Segment, as many as 14,720 entities were involved in generating artificial volume by executing reversal trades in the segment, i.e., these entities would either sell their options contracts only to buy them subsequently, or vice-a-versa, at a significant price differential thereby generating an artificial volume. This led to initiation of action by SEBI against thousands of entities and these cases are commonly known as illiquid stock options matter.

The whole history of the matter can be accessed on Bar & Bench in Regstreet Law Advisors’s article at https://lnkd.in/dxnHKKbU

The present settlement scheme arose from the Securities Appellate Tribunal’s order in Shubham Singhal v. SEBI, (SAT Appeal No. 191/2022, dated 13.05.2022) had nudged SEBI to explore another option of a Settlement Scheme, after a Settlement Scheme was made available in 2020, with attractive terms of settlement so that the entities could come forward and settle the matter which will ameliorate the harassment of penalty proceedings to the noticees and at the same time would help to clear backlog of these pending matters before various Adjudicating Officers.

Consequently, SEBI has introduced Settlement Scheme 2.0 which is operational from 22.08.22 to 21.11.22 and the FAQs released by SEBI provides for the eligibility and application process for the noticees along with necessary forms to be filed by them.

Readers can view the FAQ below.

Readers are welcome to send their questions or comments to Regstreet Law Advisors at info@regstreetlaw.com.

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