SEBI has launched the NSEL Settlement Scheme to resolve pending appeals against brokers in the ?5,600 crore market scandal, offering closure under securities law—but excluding those facing criminal prosecution.
New Delhi (ABC Live): The Securities and Exchange Board of India (SEBI) has announced a special NSEL Settlement Scheme for brokers involved in the long-drawn National Spot Exchange Limited (NSEL) crisis. The scheme is available only to those brokers against whom SEBI has passed orders for trading or facilitating trades on the NSEL platform and who have pending appeals before the Securities Appellate Tribunal (SAT) or courts.
The framework is notified under Section 15JB of the SEBI Act, 1992 and Regulation 26 of the SEBI (Settlement Proceedings) Regulations, 2018.
“The scheme is strictly limited to violations under securities laws and will not impact ongoing investigations by criminal law enforcement agencies,” SEBI clarified in its official press release.
?? Legal Grounding & Case Law References
This Scheme draws legal support from a consistent line of precedents:
? SEBI v. Rakhi Trading (2018) 13 SCC 753
The Supreme Court validated SEBI’s enforcement powers under Sections 11 and 11B of the SEBI Act to ensure market integrity, even without conventional fraud charges.
? Reliance Industries Ltd. v. SEBI, 2022 SCC OnLine SC 645
Held that SEBI settlements under securities laws do not shield violators from criminal prosecution under other laws.
? Price Waterhouse & Co. v. SEBI, 2020 SCC OnLine SAT 94
The Securities Appellate Tribunal (SAT) affirmed that SEBI can permit settlements based on voluntary disclosures and regulator confidence.
These rulings confirm SEBI’s right to resolve cases selectively through quasi-judicial settlements, without affecting criminal culpability under IPC, PMLA, or Companies Act.
? Who is Excluded from the Scheme?
The scheme will not apply to:
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Brokers named in charge sheets filed by:
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Brokers listed as defaulters on stock exchanges on the date of application.
If a broker availing this scheme is later charge-sheeted in the NSEL case, the settlement will become void automatically.
? NSEL Scam: A Snapshot
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Estimated scam size: ?5,600 crore
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Year of exposure: July 2013
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Victims: Over 13,000 retail investors
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Key allegations:
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Mis-selling of NSEL paired contracts with false return guarantees
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Forged KYC and unauthorized client trades
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Circular trading and price rigging
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Major brokers involved included: Motilal Oswal, Anand Rathi, India Infoline (IIFL), Geojit BNP Paribas, and others. SEBI had passed punitive orders against them in separate proceedings, most of which are now pending before SAT.
? Scheme Timelines
| Activity | Date |
|---|---|
| Scheme Opens | August 25, 2025 |
| Scheme Ends | February 25, 2026 (Both days inclusive) |
| FAQs Available | SEBI Website from August 25, 2025 |
Applications will be accepted through the online settlement portal, which will also provide computation of settlement amounts based on disclosed violations.
? Conclusion
SEBI’s NSEL Settlement Scheme provides a structured exit for brokers facing regulatory—not criminal—charges, streamlining the enforcement process in one of India’s largest market defaults. However, the bar on those under criminal charge or defaulters reinforces that regulatory compliance does not negate criminal accountability.
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