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The market regulator Securities and Exchange Board of India (SEBI) is working on the guidelines to regulate financial influencers, often called finfluencers on various social media platforms like Instagram, YouTube and Twitter. The move comes after the increasing number of social media influencers on multiple social media platforms that advise and recommend trades without a license. It is to be noted that the impact of such investment recommendations can be severe financially, especially for new investors.
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While addressing the Kroll-CII National Conference on ‘Corporate Frauds: Governance and Risk Management’ held in Mumbai, on Thursday, S K Mohanty, whole-time member of Sebi said that, “We are working on the guidelines for financial influencers.”
Currently, there is no regulatory framework for social media influencers to curb such activities. As per reports, Sebi aims to establish a mechanism to stop such activities. Earlier, Sebi had curbed Whatsapp groups and Telegram channels where unauthorized and anonymous entities were sharing trading advice with investors.
Sebi chief Madhabi Puri Buch, while addressing a Sebi board meeting for media in September, had reportedly said that the regulator will have to use a segmented approach towards handling the issue of unsolicited social media stock tips by random persons with no financial qualification to do so.
On 10 March, according to reports, Sebi cracked down on market operators for allegedly manipulating stocks through social media.
“Sebi is receiving information that messages with stock tips and investment advice with respect to selected listed companies are being widely circulated through websites and social media platforms”, the regulator had said.
In the light of this information, Sebi had also conducted an investigation at multiple premises such as Ahmedabad, Gujarat, Madhya Pradesh, Delhi and Mumbai. As a result, Sebi officials seized various records and documents including mobile phones, laptops, desktops, tablets, hard drive disks and pen drives. Those entities, according to the regulator, were operating nine Telegram channels with more than five million subscribers to whom they were making recommendations on select listed stocks.