Sources in Sebi said that large issues which were lead managed by well knownmerchant bankers were no problem; it was the smaller issues, where the leadmanager is a small outfit - in most cases an extension of a broking outfitor a finance company that would come under Sebi's microscope.

"There are a large number of dubious issues hitting the market," sourcessaid, adding that although it was the investor who has to decide whether toinvest or not, Sebi had to ensure that the merchant bankers also take theresponsibility for the issue sailing through.

Sebi is also planning to take a closer look at the financial health of themerchant bankers and their appraisal procedures.

Not to be caught on the wrong foot again, Sebi this time has developed astrategy to to keep tab of dubious issuers - checks and balances at themerchant banker level and at the regulator's level (that is, either thestock exchanges or Sebi). Early this week, Sebi had called a meeting of someof the stock exchanges to discuss the necessity of ensuring quality capitalissues.

One of the recommendations made at the meeting pertained to the need formerchant bankers justifying the pricing of the issue, without which theissue would should not be allowed.

Vetting of public issues by stock exchanges and tightening the listingrequirements, among other things, was only one part of the problem, thesources pointed out. It was the merchant banker who was associated with thecompany, right from the stage of formulating the issue to the time it hitsthe market and possibly to later stages.

Shoddy pricing was one of the reasons that many of the new issues were beinglisted at a considerable discount to their offer prices, sources said. Oneof the recommendations made by the stock exchanges at a meeting early thisweek was a lock-in period of one year for all preferential allotments. This suggestions is has found favour with Sebi officials, source said.