Confidentiality, Protection, and Possible Rewards

12. Confidentiality, protection and possible rewards

Informant confidentiality has exceptions. SEBI may share information for permitted legal, regulatory or law-enforcement purposes. Material relied on against someone may need disclosure; informant evidence can involve advance hearing notice. Public reporting need not identify informants or reveal their information.

Required conduct codes must protect covered employees against dismissal, demotion, suspension, threats, harassment and discrimination for reporting or assisting SEBI. Covered employees include directors, partners and regular or contract workers who learn of violations through work and file the prescribed form; advocates are excluded. Protection does not depend on enforcement, reward eligibility or information qualifying as original.

Agreements generally cannot obstruct reporting to SEBI, with specific exceptions concerning advocates and legal-representation confidentiality. Employers cannot require notification, permission, consent or employer-adviser guidance before or after filing.

People alleging retaliation can seek court or tribunal relief. Employers may face SEBI penalties, restrictions, suspension or criminal proceedings. SEBI is not required to order reinstatement or compensation; other legal remedies remain available.

Reporting gives no immunity for the informant’s misconduct. Cooperation may influence sanctions or settlement. Confidential settlement is available, and reward eligibility may remain after payment of monetary amounts. Sanctions paid by the informant, or others substantially liable for conduct they directed, planned or initiated, are excluded from the relevant calculation.

Rewards are discretionary: 10% of qualifying monetary sanctions, capped at ₹10 crore unless SEBI specifies more. Rewards up to ₹1 crore may be paid after the final order. For larger rewards, interim payment is capped at ₹1 crore; paying the balance requires recovery of at least twice that balance. Joint informants share equally. Payment comes from the Investor Protection and Education Fund.

The supplied sanctions definition uses a ₹1 crore aggregate threshold and unusually includes “non-monetary settlement terms”. It should not be read as promising a cash reward for every fine or settlement.

Disqualifications include lacking original information, excluded regulatory or surveillance sources, mandatory reporting duties, knowing falsehoods, withheld information, wilful noncooperation and specified criminal-proceeding circumstances. SEBI may waive them.

Schedule E claims a reward within SEBI’s deadline, with identity, acknowledgement, case, order and supporting details. It repeats Schedule D’s truthful-information and excluded-source declaration, including the undertaking to compensate SEBI if that declaration is untrue. Identity must be disclosed before payment; a nominee may receive payment after the informant’s death.

Both forms accept discretionary payment and contain declarations against challenging reward decisions through litigation or appeal. The Informant Incentive Committee recommends decisions; SEBI publishes specified notices, reward orders and annual reporting.