Sebi devising regulations to increase accountability of 'finfluencers'

According to Sebi, there has been an exponential rise in the number of unregistered advisors giving unsolicited stock investment tips on social media platforms

The Securities and Exchange Board of India (Sebi) is working on draft guidelines to increase the accountability of financial influencers (finfluencers) on social media, reported Livemint. Finfluencers are increasingly gaining followers with more people turning to social media for advice and hacks on stocks and investments. With a massive following, they have the ability to influence stock prices or mutual funds offerings.

While speaking at the sideline of a Kroll-CII National Conference on ‘Corporate Frauds: Governance and Risk Management’ held in Mumbai on Thursday, S K Mohanty, whole-time member of Sebi, said, "We are working on the guidelines for financial influencers." 

This follows Sebi's observation of a sharp increase in the number of different "unregistered" investment advisors providing unsolicited social media "stock" suggestions on a variety of platforms, including Telegram, Facebook, YouTube, WhatsApp, and Instagram.

In addition, influencers with sizable followings on Instagram, Twitter, and Facebook have frequently been recruited by businesses to post on social media supporting and suggesting their shares.

While addressing the board meeting for media on 30 September, Madhabi Puri Buch, chairperson, Sebi said that the regulator will have to use a ‘segmented’ approach towards handling the issues of unsolicited tips on social media. She said, "I think it's early days yet given the complex nature of this issue. We are in active discussions with the industry and various stakeholders and it will take us some time. We do not have visibility on easy solution yet."

Earlier in March, Sebi had cracked down on market operators across the country for allegedly manipulating stocks through social media. In multiple locations, including Ahmedabad and Bhavnagar in Gujarat, Neemuch in Madhya Pradesh, New Delhi, and Mumbai, the market watchdog conducted searches and seizures at the homes of seven people and one entity.

Prior to that, Sebi had issued an order in January wherein six people were barred from dealing, selling, and accessing the capital markets. Those individuals were involved in making unauthorised stock recommendations via Telegram in an effort to manipulate stock prices and generate unlawful profits. The regulator also levied a fine of Rs 2.84 crore on those people.