So far, the regulator has made no serious attempt to check the operations of shady FIIs or foreign brokerage firms. In July 2006, the Securities Appellate Tribunal (SAT) also charged Sebi with making a “grave error” in letting off two foreign brokerage firms “lightly” despite the “gravity of the charges proved against them”. The regulator had banned Credit Suisse First Boston and Dresdner Klienwort Benson for a mere 18 months for colluding with Ketan Parekh’s market manipulation.

Sebi has now got itself a sophisticated, online, real-time, integrated market surveillance system that claims to track market manipulation more effectively. Its first action has been the Nissan Copper case, whose price was ramped up from Rs 40 to Rs 137 on the day it was listed (December 29). The 40 entities under investigation include three FIIs — ITF Mauritius, VACUF Limited and Venus Capital. A Google search suggests that they are either interconnected or close associates in other deals as well.

Lets now look at Shree Ashtavinayak Cine Vision, a company that set a record of sorts by being oversubscribed 6.6 times despite a poor IPO grading of 2 out of 5. A couple of weeks ago, I wrote that subscription to this issue came from retail and high net worth institutions. It was assumed that institutional investors, with a fiduciary responsibility, would stay away from an IPO with a poor grade. Minar International, the first IPO with a similar low grade had failed when institutional investors (market sources say it was Canbank) refused to invest.

... contd.