Sebi acts against 'top finfluencer' doling out stock bets as education

Sebi has launched a search operation on a leading financial influencer in Mumbai for doling out stock recommendations without registration under the guise of investor education

The Securities and Exchange Board of India (Sebi) has conducted a search operation on a renowned financial influencer in its enforcement action against those doling out stock recommendations and advice without the required registration.

 

Sebi Whole-Time Member Kamlesh Varshney said that the regulator carried out a search on Wednesday in Mumbai.

 

“We have carried out a big search operation on a big name in this industry. I must give credit to my team who has been working on all these things. I can’t comment much further until we examine the evidence that has been collected,” he said.

 

Top financial influencers have been on Sebi's radar for giving stock recommendations under the garb of investor education. In the past, the regulator has issued strictures against individuals indulging in such activity. 

Such enforcement action is the need of the hour to provide confidence that Sebi is keeping a watch, the official said. “The enforcement action must be directed at big people, where one can show impact. The idea is to create fear in the market that there is a regulator which is watching you,” he said.

 

While Varshney acknowledged that there are some ‘good people’ focusing on investor education, there are also players who are misguiding youth in the name of education by giving investment calls and guaranteeing returns in classrooms.

 

Market regulations mandate that research analysts and investment advisors who give any kind of recommendation on investments or trades have to be registered.

 

Earlier, Sebi had taken measures to remove social media content and misleading links pertaining to stock recommendations given by those without registrations. The regulator is also working on automation of several checks through new tools to identify any possible violation in the market.

 

“We have live data. We can put technology on it and catch a whole lot of violations,” Varshney said at FICCI’s Annual Capital Markets Conference.

 

Fast-track IPO clearance

 

Sebi has crunched the timeline to enable faster IPO clearances, doling out highest approvals in July. It received 31 IPO applications during the month, of which 21 were processed. Sebi may process another 35 to 40 applications in August, he said.

 

“We saw that the number of applications are suddenly rising, so we increased our processing capacity to 15 per month in the first three months of this year. And we found even that was not good enough,” he said.

 

Last year, around 13 IPO applications were processed every month, of an average of 16 applications received by Sebi.

 

Varshney said that many companies that have obtained Sebi approvals are waiting for the right time to enter the market.

 

He emphasised that the regulator does not want a backlog of more than two to three months, unless there is some violation or complication.

 

The Sebi WTM also said it is considering regulating the grey market, which can help in better price discovery, investor interest and tax collection.