Time was when visits by the Securities and Exchange Board of India (Sebi) inspection team to stock exchanges sent shivers down the collective spine of brokers and exchange authorities. Though the regulator, in the early ?90s, was tackling militant brokers and market misdemeanours such as misuse of the carryforward or badla trade, it still did not have enough powers, and yet could strike terror in the hearts of offenders.

Headed by firebrand, cigar-chomping chairman GV Ramakrishna, Sebi was synonymous with a tough, no-nonsense regulator. Often criticised for being a bit too harsh on brokers, the regulator was, however, respected and feared at the same time. Somewhere down the line, after a few years, Sebi lost its bite. GVR had gone, and with him went much of the fire. The new look Sebi was seen by some as being surprisingly broker-friendly.

There will be proponents of both schools of thought, and there?s no clear indication whether aggression works better in regulation than a friendlier, developmental approach. However, what did happen during the years following GVR?s exit, down to beginning of the new millennium, was clearly disappointing on one count: Sebi had gradually ceased to be a regulator who was feared for its tough stance on market misdemeanours.

Cut to 2003, and the recent ban on high-profile fund manager Samir Arora, till recently the mutual fund industry?s poster boy. There?s a sea change taking place within the corridors of Mittal Court, Sebi?s modest south Mumbai HQ. There?s a sense of urgency about things, and a clear drive that crises should be prevented rather than tackled after they break out.

Sebi?s current chairman GN Bajpai is no GVR. At least in appearance. He smiles often, doesn?t smoke, and has an amiable disposition which often catches you off-guard. But scratch the affable exterior and chances are you?ll find a man deeply determined to prove that Sebi, and its leadership, are no pushovers.

The new-look Sebi proved it early enough when it stopped the open offer by Grasim Industries for Larsen & Toubro last year, pending a detailed investigation into whether the former already had control over the latter. That move was controversial because there was little or no evidence to suggest control. But Sebi went ahead regardless. The result vindicated Grasim?s stand, but also proved that Sebi was ready to take on large corporates if it wanted to ascertain the facts of a case.

Recently, a flurry of actions have brought the fear of God back in the hearts of market offenders. In a rare and significant action, a joint Sebi-National Stock Exchange team raided some market players in a nationwide crackdown on illegal ? or dabba ? trading, and debarred them from playing the markets with immediate effect. Such was the impact of the raids that an entire building was reported to have been emptied out in Bhuj as the offenders fled when the raiding team landed there. Sebi had once again begun flexing its muscles!

The ban on Samir Arora ? the result of a suo moto action ? has ensured that the market takes Sebi seriously once again. While Sebi used to leak like a sieve earlier, with investigations reported in the media even while they were on, the action against Mr Arora came after a detailed investigation which no one had got wind of. And for the first time, Sebi has not shied away from putting the media too under its scanner. While the drama over Samir Arora is still playing out, and he will appear for a personal hearing on Thursday, August 28, there?s already mounting speculation that more entities and individuals may face Sebi action as the probe widens.

The regulator has successfully restored its tough image. But along with the image change comes the greater challenge of proving the charges it brings on alleged offenders. While the action against Grasim was brave, Sebi had not found any wrongdoing in that case. But it cannot afford to go wrong too many times. The charge against Mr Arora ? that of insider trading ? is grave and often difficult to establish. Along with aggression, Sebi, one hopes, would have done its homework this time. Else, much of the good work it has done so far may be wasted.