Consent Order Framework — SEBI
The SEBI Consent Order Framework allows a person against whom enforcement action has been initiated to settle the proceedings voluntarily by paying a consent amount and agreeing to specified undertakings, without admission or denial of guilt, thereby concluding the proceedings without a formal adjudicating order.
SEBI's Consent Order Framework — currently governed by the SEBI (Settlement Proceedings) Regulations, 2018 — provides an alternative dispute resolution pathway within the enforcement process. Modelled broadly on the SEC consent mechanism in the United States, it allows market participants to settle regulatory proceedings before SEBI, SAT, or civil courts in a time-bound, negotiated manner, avoiding the prolonged adversarial litigation process.
The settlement framework is available for a wide range of alleged violations under the SEBI Act, SEBI (PFUTP) Regulations, SEBI LODR, SEBI PIT Regulations, and other SEBI-administered statutes. However, certain serious violations are excluded — these include market manipulations causing market-wide disruption, front-running by SEBI employees or exchange officials, and offences triable as criminal offences under the SEBI Act. Cases involving national security or public interest considerations are also typically excluded.
The process begins with a consent application filed by the noticee with the SEBI High Powered Advisory Committee (HPAC), either after a show-cause notice has been received or in limited circumstances even before formal proceedings begin (pre-SCN settlement). HPAC — comprising independent experts including former judges and senior professionals — reviews the application, assesses the seriousness of the violation, and recommends a settlement amount and terms.
The consent amount is calculated based on the nature and gravity of the violation, the benefits derived by the noticee, the losses caused to investors, the noticee's cooperation, and any settlement precedents. The payment of the consent amount is accompanied by an undertaking to comply with future regulations and, in some cases, compliance audits. The consent order records that proceedings are settled without admission or denial of guilt — a critical feature that limits the use of the order as evidence in parallel civil or criminal proceedings.
From a market participant's perspective, the consent mechanism offers certainty, speed, and reputational mitigation compared to contested adjudication. For SEBI, it enables recovery of funds, investor protection through disgorgement, and regulatory bandwidth optimisation. The framework has been used extensively by listed companies, promoters, brokers, and fund managers to resolve compliance lapses and LODR violations that do not rise to the level of egregious misconduct.