Sebi approves proposal to regulate unregistered finfluencers
Capital markets regulator SEBI has approved norms to regulate unregistered financial influencers, also referred to as finfluencers. In a press note following its board meeting, the regulator noted that brokers and mutual funds should stop using unregulated financial influencers for marketing and advertising campaigns. Sebi's decision comes at the back of growing concerns related to "certain persons, including unregulated entities, inducing investors to deal in securities based on inappropriate claims”.
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According to Sebi, “the persons regulated by the Board and the agents of such persons shall not have any association, like, any transaction involving money or money’s worth, referral of a client, interaction of information technology systems or any other association of similar nature or character, directly or indirectly, with any other person who, directly or indirectly, provides advice or recommendation or makes any implicit or explicit claim of return or performance, in respect of or related to security or securities”.
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However, Sebi in its note also said that financial influencers engaged in investor education will be exempt from the new restrictions. The restriction also would not apply to persons regulated by the board or their agents for their association “through specified digital platform, which has a mechanism in place to take preventive as well as curative action, to the satisfaction of the Board, to ensure that such a platform is not used by any person for providing advice / recommendation /claim of return or performance”, the press statement further noted. The regulator also cautioned that it shall be the responsibility of the person regulated by the Board to ensure that the person with whom it or its agent is associated (the finfluencer) does not indulge in such prohibited activities. In 2023, Sebi had pulled up unregistered finfluencers that were providing illegal investment advice through social media. Even the Advertising Standards Council of India had made Sebi registration a mandatory requirement for influencers operating in the BFSI category.
Tags : Sebi Finfluencers