What Sebi should do to bring financial influencers bring under its ambit?

There is a major problem when it comes to the consumption of personal finance content on social media. A social media account with a substantial number of subscribers is quite impressionable and followers keep believing that those tips would work wonders. Social media influencer and Content Strategist at Groww Aditi Khandelwal cited, “There was once an instance where I have seen influencers providing wrong tips which clearly showed that they have no knowledge on the topic.”

The root cause behind this, Arijit Sen, Sebi RIA, cofounder, Merrymind, points out, is the existing regulatory framework where there is no onus on the part of content creators to disclose whether they actually have the competence to represent themselves as personal Finance Advisers or not.

Though monitoring social media isn’t going to be a very easy task, the Securities and Exchange Board of India (Sebi) is trying to find a solution. On Thursday, Sebi said it is working on a set of guidelines for financial influencers on such platforms. 

“It is a long-awaited move in the interest of investors at large. The impractical and/or false claims from content creators are required to be tracked and necessary action needs to be taken for the overall growth of the investment industry,” Sen asserts

What actions Sebi should take?

Speaking about the prompt actions needed from the regulatory board, Sebi RIA Avinash Luthria said, “For example, shutting down unregistered investment advisers and research analysts who collect fees from clients. And also changing the regulation to stop most stockbrokers from making reckless recommendations about futures and options and micro-cap stocks.” 

Hence practically SEBI may be forced to first try to persuade the Advertising Standards Council of India (ASCI) to be stricter with finfluencers, advertisers and traditional/social media platforms. Further, from ASCI’s list of non-compliant entities, SEBI could publicise the subset that relate to securities, he says.

On 10 March,Sebi cracked down on market operators for allegedly manipulating stocks through social media. It carried out searches at the premises of at least seven individuals and one company across several locations in Ahmedabad and Bhavnagar in Gujarat, Neemuch in Madhya Pradesh, New Delhi, and Mumbai.


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