So the Securities and Exchange Board of India (SEBI) is looking that way yet again: foolish, inept and out of its depth. Last fortnight when the Securities Appellate Tribunal (sat)-the capital market's appellate authority-threw out the market regulator's charges of insider trading against Samir Arora, the former Chief Investment Officer of Alliance Capital Asset Management Co., it wasn't for the first time that sat disposed what SEBI in a punitive mood proposed (SEBI had banned Arora for five years from dealing in securities; sat has dumped every single charge of SEBI against Arora). It's been happening with almost nauseating monotony for the past so many years now. Remember the watchdog's ban on Videocon International and BPL from accessing capital markets for apparently manipulating stock prices in the late nineties? It didn't last long: sat stepped in and duly threw out those orders. The Tribunal couldn't find evidence to make the charges of price manipulations stick.

Then a few years later, sat actually ordered SEBI to return the Rs 5 lakh-odd penalty Reliance had paid for apparently violating SEBI's disclosure norms during its sale of shares of Larsen & Toubro to Grasim. SAT didn't feel the Ambani company had deliberately broken the law. It doesn't end there. There are numerous cases of SEBI wielding the stick on smaller companies for bringing grief to investors in various ways as well as on big brokers (like Anand Rathi), only for sat to come into the picture and return the stick to SEBI, with the wrong end pointing squarely in the direction of the regulatory watchdog.

So what's going on? If you believe in the sanctity of the Tribunal-and there's little provocation not to-then it's more likely that SEBI's investigations are either half-baked or the powers vested in it are limited or its interpretation of the powers vested in it are flawed or perhaps a combination of all these. SAT's verdict on Arora is significant not because it makes the former mutual fund poster boy emerge as innocent as a grey-robed priest, but because it goes on to bring home the bitter reality that insider trading is difficult to pin down-although it's as rampant as probably pick-pocketing. SEBI, for its part, had the right idea in going after Arora-few insider trading cases could get as high a profile as this one involving the star fund manager-but then punitive intentions are one thing, and taking them to their lawful conclusion, quite another.

A couple of years ago, when SEBI was armed with more teeth that allowed it to search and seize and slap chunky fines, amongst various other powers, it appeared that the watchdog's ambit had indeed widened and that it was now ready to take on price riggers, market manipulators and generally anybody messing around with the small investor. But that was clearly expecting too much. Apparently, according to one recent legal opinion, many of SEBI's noble guidelines are probably just about worth the paper they're printed on as they don't have the authority of the law simply because they are not passed in Parliament. After 12 years of ostensibly being set up to protect investors and make the markets a fair-playing field, such an observation makes the watchdog look limp and wilting, and its chairman's grand declarations of investor-protection, empty rhetoric. After all, if SEBI's guidelines are not going to pass muster in a court of law, we're going to see an endless stream of market debauchers being hauled up by a watchdog backed by little but crackpot evidence, and sat stepping in later and consigning SEBI's orders to the nearest dustbin.

Let's even assume that SEBI has been empowered with more teeth that makes it more effective in a court of law. The moot point is whether the watchdog is using its existing fangs effectively enough. Is SEBI on the ball when it comes to investigations? The Samir Arora fiasco is just yet another indicator that it isn't. That it can't.