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In a stern reminder of its zero-tolerance stance on regulatory breaches, the Securities and Exchange Board of India (SEBI) has imposed a monetary penalty of Rs 1 lakh on Integrated Master Securities Pvt Ltd. The action stems from the broker’s submission of falsified call recordings during an investigation into suspicious trading activity in the shares of Mastek Ltd. The case underscores SEBI’s growing emphasis on data integrity and intermediary accountability in capital market surveillance.
Key Developments in the Case
SEBI initiated a probe into trades in Mastek Ltd between December 2022 and August 2023, following concerns over irregularities in trading patterns.
Integrated Master Securities, a SEBI-registered stockbroker, was found to have submitted recreated audio files instead of original call recordings of client orders.
The broker initially claimed that recordings from July 2023 were unavailable, but later submitted 14 audio files on January 2, 2025, asserting they were original.
Upon forensic verification, SEBI discovered that the recordings were fabricated on December 31, 2024, and not contemporaneous with the trades in question.
Investigation Findings
SEBI’s detailed inquiry revealed multiple layers of misconduct:
The recreated calls were coordinated between the broker’s staff and employees of its client, SG Realtor Pvt Ltd.
The phone number used to place the recreated orders had not been registered with the broker during the relevant trade period.
Supporting evidence from call data records, WhatsApp exchanges, and recorded statements confirmed the fabrication.
The broker admitted that original recordings could not be located but argued that the recreated calls reflected the same orders and were not misleading.
SEBI rejected this defense, citing that the submission of fabricated evidence constitutes a violation of Section 11C(3) of the SEBI Act, which prohibits furnishing false or misleading information during investigations.
Regulatory Implications
SEBI emphasized that brokers are legally obligated to maintain original call recordings of telephonic orders for a minimum of three years, regardless of whether disputes arise.
The regulator clarified that intent to deceive (mens rea) is not a prerequisite for imposing penalties under the SEBI Act.
Although SEBI extended some benefit of doubt regarding alleged violations of circulars on record maintenance, it held that the act of furnishing recreated recordings during an active investigation was a serious breach.
The penalty was levied under Section 15A(a) of the SEBI Act, reinforcing the principle that intermediaries must uphold transparency and cooperate truthfully with regulatory authorities.
Broader Market Context
This enforcement action comes amid SEBI’s broader push to tighten compliance norms across market intermediaries. Recent months have seen penalties imposed on exchanges, brokers, and research analysts for lapses ranging from data leaks to manipulation of client codes. The regulator’s increasing reliance on digital forensics and cross-verification of communication records signals a shift toward more tech-enabled enforcement.
For investors and market participants, the case serves as a cautionary tale about the importance of robust recordkeeping and ethical conduct. It also highlights SEBI’s evolving toolkit in detecting and penalizing non-compliance, even in cases where financial loss or client disputes are absent.
Conclusion
The Rs 1 lakh penalty may appear modest in quantum, but its symbolic weight is significant. By penalizing Integrated Master Securities for submitting falsified call recordings, SEBI has sent a clear message: procedural integrity and truthful cooperation are non-negotiable pillars of India’s capital market framework.
Sources: Moneylife
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