Sebi Lays Down Strict Instructions on Finfluencers With More Clarifications

Sebi Acts Lays Down Strict Instructions on Finfluencers With More ClarificationsSecurities and Exchange Board of India (Sebi) has come down heavily on finfluencers selling stock tips on social media platforms under garb of “for educational purposes only”. The markets regulator has issued a draft circular, thereby restricting the usage of latest share price data.

Sebi said in a circular, “Such person (someone who is engaged solely in education) 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.”

Moreover, if a person is solely engaged in education, he or she is not authorised to give any sort of recommendation or advice related to any security unless the entity is a registered advisor.

Under the stated rules, non-registered finfluencers are barred from making claims about the performance of any security. Those found violating the latest guidelines could face penalty, suspension/cancellation of registration, debarment etc, Sebi said.

Recently, finfleucers have been under the lens of Sebi, for disseminating half-baked knowledge and biased views about the equity markets, which in turn had a significant impact on the stock prices. Sebi had last amended norms to regulate unregistered financial influencers by also calling out associations between its regulated entities and unregistered entities.

Under the new rules, regulated entities including mutual fund houses, research analysts, registered investment advisors and stock brokers cannot partner with unregistered finfluencers.

Notably, Sebi came down heavily against influencers, which included 'Baap of Chart', Ravindra Balu Bharti and PR Sundar as they were flouting regulations.