Winning Bizness Desk
Mumbai. In a decisive move to protect investors, the Securities and Exchange Board of India (SEBI) has implemented strict regulations targeting finfluencers—social media personalities who provide stock market advice. The new rules aim to curtail the influence of unregistered financial advisors on platforms like YouTube and other social media channels, which have become increasingly popular among retail investors. SEBI's latest amendments are designed to regulate non-registered influencers who have been offering stock recommendations without proper authorization. These changes come in response to growing concerns about the potential risks posed by such individuals, who often operate without accountability. In three separate notifications, SEBI has 'curbed' any association between its regulated entities and these non-registered advisors.
According to SEBI's new guidelines, any person or entity regulated by SEBI, including their agents, is now prohibited from having direct or indirect contact with individuals who provide unregistered financial advice or make unsubstantiated claims of guaranteed returns. The rules aim to prevent mutual fund companies, research analysts, registered investment advisors, and stockbrokers from partnering with influencers who might mislead investors for personal gain. SEBI's notification states: "No person regulated by the Board (SEBI) or an agent of such person shall have any direct or indirect relationship with any person who directly or indirectly gives advice or any recommendation in respect of or relating to any security or securities, and that person is not registered with the Board or has not been permitted by the Board to give such advice or recommendation."
Market experts have praised SEBI's decision, noting that the requirement for influencers to register with the regulator and adhere to specific guidelines will raise standards of accountability and expertise in the financial advice sector. By enforcing these regulations, SEBI aims to protect retail investors from biased or misleading advice that could result in significant financial losses.
The move also marks an end to the commission-based model that many influencers have relied on to generate income. In the past, influencers have played a substantial role in shaping the financial decisions of their followers, often without sufficient expertise or regulatory oversight. With these new rules, SEBI is taking a firm stand against the spread of unregulated financial advice, ensuring a safer and more transparent investment environment for all. This regulatory tightening by SEBI signals a significant step towards safeguarding the interests of retail investors in India, as the popularity of social media and online financial advice continues to grow.
