Still, Sebi does not give Marwah star billing — his name figures only after the promoters of Atlanta. The Sebi order itself appears to be extremely meticulous. It contains a chart depicting the precise links between the promoter group and market operators as well as the flow of funds between them. However, from a larger market perspective, the order seems pointless, especially since it was announced in a week when realty and construction company shares have dipped between 20 to 35 per cent.

While Sebi conducted its slow investigation, Marwah’s businessmen cronies were ramping up the share price, making false announcements about business developments, diverting money raised from the public, misleading investors and making a mockery of Sebi’s disclosure and information dissemination rules. The Sebi order calls it, “abuse of the stock exchange mechanism, the listing agreement and regulations related to preferential issue of security to unfairly maximise their wealth at the cost of the lay investor”.

Atlanta Ltd, is a construction company that has changed its name and profile several times. Its actions, as documented in the Sebi order, prove what this column has repeatedly argued — that disclosures alone are meaningless unless stock exchanges verify their claims. There have been specific instances of companies suppressing negative news and claiming false positive developments. In a volatile market, where companies raise and transfer money very quickly, meticulous investigation is futile if it is not timely.

Importantly, over the last year, somebody has mailed over 30 letters alleging impropriety, inaction and worse by Sebi’s surveillance department. Each neatly typed letter is sent to multiple government authorities and mentions at least one specific case of price manipulation. All the letters have a name and an address (but never a telephone number), since the sender is probably aware that anonymous letters are ignored by vigilance agencies.

While the allegations against top Sebi officials may be unjustified, the stocks mentioned in the letters begged for detailed scrutiny. Sebi has spent a lot of time to establish that the names and addresses mentioned in the letters are fake. But what about the market manipulators mentioned in the letters?

I decided to re-examine all the 30 odd letters I have received. I find a May 26,2006 letter points to rampant manipulation of eight real estate stocks, where some regulatory enthusiasm would clearly have had a cooling effect. One of these was Anantraj Industries, which had made a record of sorts by rising 6,000 per cent in the 18 months from May 2005 to December 2006. Can this entire surge alone be attributed to a booming realty and construction sector? A June 15 letter again points to the rise in Anantraj industries from Rs 25 to Rs 232 during a short span of time without any significant change in fundamentals. A third letter in August mentions it again.

Then in September 2006, the writer points to the antics of Manish Marwah and two others. This letter is addressed to the finance minister and says, “Your timely action would restore the confidence of investors in the market”. On October 14, 2006 another missive links Manish Marwah specifically to Atlanta Ltd and mentions the grey market operation in the IPO as well as the fact that it was almost entirely subscribed to by Marwah and the promoter group. The shares were listed on September 26, 2006, making the information extremely timely. Sebi’s order last week, sketching the movement of issue proceeds bears this out. On December 1, 2006 there is yet another warning about Atlanta — this time pointing out that the scrip has risen to Rs 850 in just 25 trading sessions. It says this is a perfect case for “vanishing company” in the future.

The Sebi order reports that Atlanta shares rose from the offer price of Rs 150 to Rs 1,446 on January 17, 2007, during which the company made a series of positive announcements to justify the price manipulation and raised another Rs 85 crore through the issue of convertible preferential warrants. It also says that the promoter holding after this would be as high as 73 per cent.

Given this saga of warnings, it is amazing that price manipulation was allowed to continue, without a single warning signal from the regulator until the February 22, 2007 order. And it is ironical that the order itself was finally issued when realty stocks have already begun to lose their sheen.

Astonishingly, Sebi’s website shows a January 2002 investigation into Manish Marwah’s dealings in shares of Sun Infoways Ltd. This investigation was wound up in June 2006, without Marwah replying to the charges against him, apparently because there is “no proof of service of summons available on record”. Is this a reflection of how Sebi uses market intelligence and tracks market activity? Now that Sebi has identified 14 entities connected with Manish Marwah, will its Integrated Market Surveillance System quickly provide details about other activities so that regulatory action is timely and meaningful?

The Sebi order also raises questions about whether Sebi has lost its credibility as a market watchdog. Even after its high profile action in the multiple application scam, IPOs continue to be routinely ramped up on listing day. Last Thursday, Ahluwalia Contractors, which issued its shares at Rs 54 had soared to Rs 611 on the day of listing. This is a trend seen in Nissan Copper, Ashtavinayak Cine Vision and AI Champdany. Does Sebi plan to act?