Online influencers are giving out financial and investing advice, even though they might not be certified.
SEBI, the market regulator is working on a set of rules to guide the growing base of financial influencers, or finfluencers who put out unsolicited financial advice on social media platforms.
“We are working on guidelines for financial influencers," Sebi whole-time member S.K. Mohanty said on the sidelines of the Confederation of Indian Industry National Conference on ‘Corporate Frauds: Governance’ held in Mumbai on Thursday.
There has been a sudden rise witnessed by the market regulator in India doling out financial and investment advisors, offering stock tips on social media platforms such as WhatsApp, Instagram, YouTube, Facebook and more even though they may not be qualified to do so. And there have been several reports of companies approaching these influencers to endorse their stocks.
Financial advisors must register themselves under SEBI regulations, which gives them legitimacy. In India, there are over 1,300 registered investment advisors.
For SEBI, the emergence of financial influencers has presented challenges. Influencers and famous people violated the law 415 times in content relating to money and cryptocurrencies in FY22.
The threat of unsolicited stock suggestions on social media must be addressed by the regulator in a "segmented" manner, Sebi chairperson Madhabi Puri Buch stated at a board meeting on September 30.
“I think it’s early days given the complex nature of this issue. We are in discussion with the industry and various stakeholders and it will take us some time. We do not have visibility on an easy solution yet," she added.
On March 10, Sebi retaliated against market participants for allegedly manipulating stocks via social media. At least seven people and one company's locations were searched, including those in Ahmedabad and Bhavnagar in Gujarat, Neemuch in Madhya Pradesh, New Delhi, and Mumbai.
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 "SEBI cracks down influencers for manipulating stocks via social media; working on guidelines")
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