Abstract

An amendment to the Act on the Supervision of the Financial Market introduced the possibility of reaching a settlement concerning extraordinary mitigation of sanctions. The proceedings for reaching such a settlement are incidental proceedings, to which the general rules of administrative proceedings apply. A settlement can be reached either before the issuance of the first decision in the case or after its issuance, during the stage of the PFSA’s review of a request for reconsideration of the case. A settlement may be concluded if the PFSA determines that such an action will contribute to the acceleration of the proceedings or otherwise enhance the fulfillment of the objectives of the financial market supervision. The conditions for concluding a settlement include the cessation and removal of the effects of the violation and the disclosure by the supervised entity of material circumstances related to the violation. A settlement may be initiated by the PFSA or upon the request of the supervised entity. During the settlement procedure, the PFSA proposes the terms of the settlement to the supervised entity, to which the entity may either consent or refuse. The supervised entity may commit to specific actions in connection with the identified violation. The settlement procedure concludes with the issuance of a final and non-appealable administrative decision approving its terms. The essential content of the settlement includes the reduction (or complete lifting) of sanctions and, potentially, the obligation of the supervised entity to remedy the effects of the violation. Failure to fulfil the commitments made within the settlement may result in financial penalties being imposed on the supervised entity and its management. Additionally, the original sanction proceedings are automatically resumed in such cases. Reaching a settlement allows for a reduction in the severity of the imposed sanctions and facilitates a faster conclusion of the proceedings. It is also beneficial for the supervised entity and its management from a reputational perspective.