The Securities and Exchange Board of India (Sebi) is investigating the role played by Morgan Stanley for its role in the sale of shares in a media firm in 2000.

Media company Balaji Telefilm said before the sale that it would not change its share structure within six months of its stock market debut.

But a few days before its shares were to start trading publicly, the company announced it was in merger talks.

Morgan Stanley, who helped manage the sale, says it has done nothing wrong and did not know about the deal until two days after its responsibilities in the offering ended.

If it is proved that Morgan Stanley did break the rules, the company could be suspended for a month from advising on or managing sales of shares.

The proposed merger never happened.

Previous scandals

This is the latest move by Sebi to ensure companies keep strictly to the regulations after they uncovered a price-rigging scandal last year.

Sebi is also looking into the role of the other firms involved in the management of the share sale, IL&FS Merchant Banking Services Ltd and Triumph International Finance Ltd.

The chief promoter of Triumph is Ketan Parek, a key player in last year's price rigging scandal.

This scandal is still under investigation.