Sebi cracks down on 'finfluencers' with new rules on stock education

Sebi's latest circular states that stock market educators can only use stock prices with a three-month lag, effectively preventing them from offering real-time trading tips disguised as education

The Securities and Exchange Board of India (Sebi) has delivered a major blow to financial influencers (finfluencers) by restricting their use of live stock market data in educational content. Under the new rule, announced through a circular on late Wednesday evening, stock market educators can only use stock prices with a three-month lag, effectively preventing them from offering real-time trading tips disguised as education.

 

“A person engaged solely in education shall mean that such person is not engaged in any of the two prohibited activities. Such person should not be using the market price data of the preceding three months to speak/talk/display the name of any security including using any code name of the security in his/her talk/speech, video, ticker, screen share etc. indicating the future price, advice or recommendation related to security or securities,” the circular read.

 

This move is expected to end the illegal advisory businesses that many finfluencers operate without Sebi registration. Sebi first restricted associations between registered and unregistered entities in its October 2024 circular, and the latest update on January 29 further tightens the rules.

 

“These regulations have come into force with effect from August 29, 2024,” the market regulator said.

 

Key points in Sebi’s latest circular state:

• Stock market educators cannot use live stock prices - only data with a three-month lag.
• Registered market entities cannot associate with finfluencers in any way that involves monetary or non-monetary compensation.
• Investor education is allowed, but educators must not give investment advice or make performance claims without Sebi’s approval.
• Educators cannot use stock names, codes, or price data from the past three months in any form that could imply investment advice.

 

Any entities found violating these rules risk penalties, suspension, or cancellation of their Sebi licence, the circular stated.

 

“It is the responsibility of the persons regulated by Sebi to ensure that any person associated with them or their agent, directly or indirectly, does not engage in any of the above-mentioned two prohibited activities, directly or indirectly,” Sebi said.

 

The rise of finfluencers on social media platforms has blurred the lines between financial education and investment advice, making it difficult to distinguish credible sources from misleading ones. Without access to live data, many finfluencers are likely to find it difficult to retain subscribers and students, as their business model relies heavily on real-time market speculation.