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In recent months, the Securities and Exchange Board of India (SEBI) has taken strong action against unregulated financial influencers, or “finfluencers.” SEBI has successfully removed over 15,000 content sites linked to these finfluencers with the help of various technology platforms. This effort is part of SEBI’s larger mission to protect investors from misleading financial advice that can lead to significant losses.
Kamlesh Varshney, a whole-time member of SEBI, stressed that this crackdown aligns with SEBI’s commitment to preventing regulated entities from associating with unregistered finfluencers. Complaints from investors who were misled by these influencers prompted SEBI to collaborate with tech platforms to tackle the issue. Varshney emphasized SEBI’s focus on balancing investor education with regulation, ensuring that financial advice in the stock market is both reliable and compliant.
To enhance oversight, SEBI has urged tech platforms to develop systems that can identify and monitor unregulated content. This proactive stance is a key part of SEBI’s strategy to refine its regulatory framework. Varshney also mentioned that SEBI is considering easing some restrictions on registered investment advisers (RIAs) and research analysts (RAs). With over 1,000 responses to this proposal, the topic will be discussed in SEBI’s upcoming board meeting in September 2024.
Beyond cracking down on unregistered finfluencers, SEBI is also reviewing regulations for initial public offerings (IPOs) of small and medium enterprises (SMEs). Ashwani Bhatia, another whole-time member, noted that a discussion paper on this will be released by year’s end. SEBI’s new rules are clear: regulated entities, including mutual fund houses, stockbrokers, and research analysts, must avoid any direct or indirect association with unregistered finfluencers. These regulations aim to protect retail investors from biased or misleading advice, often provided by influencers working on a commission-based model.
While SEBI’s crackdown focuses on safeguarding investors, it still allows room for investor education, provided that no financial advice or return claims are made. By setting these strict standards, SEBI aims to promote accountability in India’s stock market and ensure that only qualified, regulated individuals offer financial guidance.
