SEBI Mulling Bringing Finfluencers Into Regulatory Net

Amid various ongoing controversies surrounding finfluencers, who are providing illegal investment advice via social media platforms, markets regulator the Securities and Exchange Board of India (SEBI) is reportedly mulling to bring them under the ambit of market norms.

Speaking at the Mint Annual BFSI Summit and Awards, Kamlesh Varshney, a whole-time member of SEBI, said that the primary task would be to bring most of the finfluencers into the regulatory net so that it becomes easy to monitor whether they are complying with the security laws. 

It is pertinent to note that in September last year, SEBI chief Madhabi Puri Buch urged finfluencers looking to deal with securities or partner with regulated entities to register with the market regulator. 

Noting that SEBI respects an individual’s freedom of speech, Buch said, “If your actions cross into enticement, entrapment, or fraud, that’s unacceptable.”

Last year, in a consultation paper, SEBI also defined “financial influencers” or “finfluencers” as persons who provide information and/or advice on various financial topics such as investing in securities, personal finance, banking products, insurance, real estate investment, etc. through social/digital media platforms/channels and can influence the financial decisions of their followers.

The paper also said that intermediaries registered with SEBI must proactively sever ties with any unregistered entities that are using their name, product or service.

SEBI’s actions against the finfluencers took a serious turn last year after social media posts from multiple internet influences including Ravisutanjani Kumar, Abhishek Kar and even the very-famous Ankur Warikoo raised major controversies. 

Recently, SEBI also took action against Hyderabad-based finfluencer Mohammad Nasiruddin Ansari, barring him from participating in securities markets while also mandating the disgorgement of INR 17.2 Cr, accusing him of luring investors with false and misleading information and offering unregistered investment advisory services.

“You must be seeing that lot of orders that we are passing in case of influencers whenever we noticed something is going wrong. But that is, of course enforcement side but on the regulatory side, our objective going forward is that to make regulatory changes based on the inputs from the industry, so that all these influencers are on board(registered),” Varshney was quoted as saying by Mint.

Meanwhile, it is pertinent to mention that recently SEBI has made regulatory changes in short selling by imposing a ban on naked short selling. 

Speaking on whether SEBI is making too many changes to rules constantly, Varshney also told the publication that the regulator was adopting a balanced approach.

He added that a final call on cryptocurrency trading must be taken by the concerned ministry and currently, there is no mandate on SEBI to regulate cryptocurrencies.

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