SEBI approves norms on finfluencers, bars registered entities from associating with them
The Securities and Exchange Board of India (SEBI) on Thursday set the ground rules for unregistered financial influencers, or 'finfluencers,' prohibiting regulated entities from dealing with them.
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FollowThe Securities and Exchange Board of India (SEBI) on Thursday approved finfluencer norms, prohibiting regulated entities like brokers from dealing with finfluencers.
The market regulator's press release read: "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 unless permitted by the Board to provide such advice/recommendation."
Financial influencers, often known as "finfluencers," are people who use social or digital media platforms to offer advise on a range of financial subjects, including real estate investment, banking products, investing in stocks, and personal finance. They are said to possess the power to affect their followers' financial choices.
However, their rise has also led to numerous instances of misleading investors. Some finfluencers have even partnered with brokers and mutual funds to attract more customers, often engaging in unethical or illegal practices.
This move marks a significant step in protecting investors from misleading financial advice and ensuring that all financial influencers operate within a regulated framework.
SEBI's action follows a consultation paper released in August seeking public input on the issue. The paper proposed that registered finfluencers should display their registration number, contact details, investor grievance helpline, and appropriate disclaimers on their posts.Â
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