CDSL Settles With SEBI For ₹1.3 Crore Over Alleged Regulatory Violations

This settlement stems from alleged non-compliance with specific directives issued by SEBI. SEBI initiated adjudication proceedings against CDSL under Section 15HB of the SEBI Act, 1992. The proceedings were based on alleged violations of multiple clauses from SEBI's circulars. These circulars outline the operational framework for handling transactions in defaulted debt securities.

The provisions that CDSL allegedly violated include:

1. Clause 1.2 of SEBI Circular dated June 23, 2020: This clause requires depositories to temporarily restrict transactions in defaulted debt securities from their maturity or redemption date until the status of payment is determined.

2. Clause 4.1 of SEBI Circular dated June 23, 2020: According to this clause, depositories, in coordination with stock exchanges, must update the ISIN master file and lift restrictions on transactions within two working days of receiving intimation about a default from the issuer or debenture trustee.

3. Clause 2.2 of Chapter XI of the SEBI Operational Circular dated August 10, 2021: This clause reiterates the requirements of Clause 1.2 with emphasis on the need for timely action by depositories in the event of a default.

4. Clause 5.1 of Chapter XI of the SEBI Operational Circular dated August 10, 2021: This clause aligns with Clause 4.1 and mandates the immediate update and dissemination of information regarding the resumption of transactions in defaulted debt securities.

In response to these allegations, CDSL sought to settle the matter through SEBI's settlement mechanism without admitting or denying the findings. The depository filed a settlement application with SEBI. The application was reviewed by SEBI's Internal Committee, and after subsequent revisions proposed by CDSL, the High Powered Advisory Committee (HPAC) recommended a settlement amount of ₹1.3 crore.

However, SEBI still retains the right to initiate proceedings if it discovers that CDSL has not fully disclosed all relevant information or has violated any undertakings associated with the settlement.

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