Research Analysts (RAs) may use alternative documentary evidence in place of call recordings for interactions with institutional investors. This alternative evidence includes emails, SMS, and other legally verifiable records. This article provides a comprehensive technical analysis of alternative documentary evidence requirements.
Regulatory Basis
Record-Keeping Requirement
Under Regulation 25(1) , RAs must maintain records of interactions with clients.
Alternative Evidence
For institutional investors, RAs may rely on alternative documentary evidence:
- Emails
- SMS
- Legally verifiable records
- Digital footprints
Types of Alternative Evidence
1. Emails
Definition: Electronic mail communications.
Requirements:
- From registered email ID
- Clear and accurate
- Traceable to the client
- Retained for five years
Advantages:
- Clear audit trail
- Easy to store and retrieve
- Legally acceptable
2. SMS
Definition: Short Message Service communications.
Requirements:
- From registered mobile number
- Clear and accurate
- Traceable to the client
- Retained for five years
Advantages:
- Quick communication
- Mobile-friendly
- Can be archived
3. Legally Verifiable Records
Definition: Any record that can be legally verified.
Examples:
- WhatsApp messages
- Telegram messages
- Slack messages
- Other messaging platforms
Requirements:
- Legally verifiable
- Clear and accurate
- Traceable to the client
- Retained for five years
4. Digital Footprints
Definition: Digital records of interactions.
Examples:
- Website activity logs
- Portal access logs
- Document download logs
Requirements:
- Clear and accurate
- Traceable to the client
- Retained for five years
Record Keeping Requirements
1. Clear and Accurate
Records must be clear and accurate.
2. Traceable
Records must be traceable to the client.
3. Retained
Records must be retained for five years.
4. Accessible
Records must be accessible for inspection.
Acceptable Evidence Standards
For Emails
| Aspect | Requirement |
|---|---|
| Sender | Client's registered email ID |
| Subject | Clear subject line |
| Content | Clear and accurate |
| Date/Time | Accurate timestamp |
| Attachment | Any attachments included |
For SMS
| Aspect | Requirement |
|---|---|
| Sender | Client's registered mobile number |
| Content | Clear and accurate |
| Date/Time | Accurate timestamp |
For Messaging Platforms
| Aspect | Requirement |
|---|---|
| Sender | Client's registered ID |
| Content | Clear and accurate |
| Date/Time | Accurate timestamp |
Record Retention
Duration
Five years from the date of the interaction.
Format
Electronic or physical format.
Accessibility
Accessible for inspection by SEBI/RAASB.
Common Compliance Gaps
1. Inadequate Evidence
Some RAs do not maintain adequate alternative evidence.
Solution: Maintain clear, accurate, and traceable records.
2. Not Retaining for Five Years
Some RAs do not retain records for five years.
Solution: Retain records for five years.
3. Not Accessible
Some RAs do not keep records accessible.
Solution: Ensure records are accessible for inspection.
4. Using Unverifiable Records
Some RAs use records that are not legally verifiable.
Solution: Use legally verifiable records.
Conclusion and How Anuj Desai & Associates Can Help
Alternative documentary evidence provides a flexible option for RA record keeping.
Anuj Desai & Associates offers specialized services to help RAs implement alternative evidence systems:
- Record keeping system setup
- Documentation templates
- Compliance audit and advisory
Contact us today to ensure your alternative evidence practices comply with SEBI requirements. Our team will guide you through the process.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers are advised to consult qualified professionals for legal and compliance matters. Anuj Desai & Associates is a SEBI compliance consulting firm based in India.