The Securities and Exchange Board of India (SEBI) is set to vote on new rules aimed at regulating unregistered financial influencers, often referred to as finfluencers. This decision, scheduled for the upcoming board meeting on June 27, follows SEBI’s concerns about the impact these influencers have on investment decisions.
According to sources familiar with the matter, SEBI is considering strict measures to prevent regulated financial entities from collaborating with unregistered finfluencers. Additionally, SEBI may require registered finfluencers to clearly display their registration details, ensuring transparency.
SEBI’s worries stem from the significant influence wielded by unregistered finfluencers through social media platforms. The concern is that some of these influencers may lack the necessary knowledge and understanding of the financial products they promote, potentially misleading their followers.
Last year, SEBI defined “financial influencers” as individuals who offer financial advice or information through digital platforms, influencing their followers’ investment choices. SEBI also instructed registered intermediaries to cease dealings with unregistered entities.
Earlier this year, SEBI indicated its intent to bring finfluencers under its regulatory framework to ensure compliance with securities laws. This move reflects SEBI’s proactive approach to overseeing this growing segment.
SEBI has previously taken action against finfluencers. For instance, Mohammad Nasiruddin Ansari from Hyderabad was penalized and barred from participating in the securities markets, with orders to return funds. Similarly, PR Sundar faced penalties for providing investment advice without proper registration, requiring payments to SEBI and investors.
Ruchit Gupta of Capital Gain Research also faced penalties, including refunds to investors and temporary market restrictions, demonstrating SEBI’s commitment to enforcing compliance and protecting investors.
As SEBI prepares to vote on these regulations, it seeks to ensure that finfluencers operate within established rules, aiming to safeguard investor interests and maintain market integrity.
