Sebi Cracks Down On Unregistered Finfluencers With New Guidelines

Sebi Cracks Down on Unregistered Finfluencers with New Guidelines

To curb the growing influence of unregistered financial influencers, or "finfluencers," the Securities and Exchange Board of India (Sebi) has issued a draft circular that restricts the use of live share price data by individuals posing as educational figures on social media.

According to Sebi's new guidelines, individuals who claim to be providing financial education cannot use market data from the past three months to discuss or display the names of any securities, including through videos, speeches, or ticker displays, nor can they make predictions or recommendations related to stock prices.

The regulator emphasized that those engaged purely in education must not provide advice or make recommendations about securities unless they are registered as financial advisors. Additionally, non-registered finfluencers are prohibited from making any claims, explicit or implied, about returns or investment performance.

Sebi has outlined potential consequences for violators, including penalties, suspension or cancellation of registration, and debarment. The move comes as concerns rise about the impact of finfluencers, who often lack in-depth knowledge and offer biased advice, on stock prices.

Last year, Sebi introduced stricter norms to regulate these influencers and banned associations between regulated entities and unregistered finfluencers. Notably, mutual fund houses, research analysts, registered investment advisors, and stock brokers are now prohibited from collaborating with unregistered influencers. Sebi has previously taken action against notable finfluencers such as "Baap of Chart," Ravindra Balu Bharti, and PR Sundar for violating its regulations.