Sebi launches return verification agency to curb misselling in investments

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India's market regulator on Monday launched a new risk and return verification agency to curb mis-selling of investment products and tighten supervision through digital audit trails and standardised reporting.

Earlier this year, Reuters reported that the Securities and Exchange Board of India (Sebi) is seeking broader powers from the government to remove unauthorised financial advice from social media platforms such as WhatsApp and Telegram, and to access their call records for investigations into market violations.

The new Past Risk and Return Verification Agency (PaRRVA) system is a tech-driven reform, aimed at bringing credibility and consistency to performance reporting through digital audit trails, Sebi Chairman Tuhin Kanta Pandey said on Monday.

Credible performance data is critical to manage expectations and promote "responsible investing", he said, warning that finfluencers and unregistered entities often lure investors with exaggerated or fabricated returns.

The PaRRVA platform will eventually provide investors with verified performance records of services offered to them, while allowing regulated intermediaries to present genuine track records.

The regulator has stepped up action against unregistered social media financial influencers, telling brokers and mutual funds to cut ties with who offer unauthorised stock tips or trading advice.