Settlement disqualification criteria clarified: only serious defaults with market wide impact or investor rights harm bar settlement; restitution and admission may permit settlement. The amendment narrows the settlement bar in regulation 5(2)(b) by specifying that only serious defaults-those with market wide impact, causing substantial investor losses, or affecting investor rights-are disqualified. Applications may still be considered if the applicant intends to make good investor losses and gives a written admission of the charge for the purpose of settlement. Seriousness is assessed by reference to the default's nature, the applicant's role, evidence weight, cooperation, referrals to investigative authorities, and potential systemic risk to financial institutions; market wide impact and investor rights effects are further defined.