SEBI proposes disassociation of market intermediaries from unregistered ‘finfluencers’
Market regulator SEBI recently released a consultation paper proposing that intermediaries should dissociate themselves from unregistered financial influencers, also known as “finfluencers”. The consultation paper comes amid a rise in the number of unregistered investment advisors giving out stock tips on social media platforms. As per the paper, ‘No SEBI registered intermediaries or regulated entities or their agents or representatives shall, directly or indirectly, have any association or relationship in any form, whether monetary or non-monetary, for any promotion or advertisement of their services or products, with any unregistered entities (including finfluencers)’. SEBI-registered intermediaries should take active measures to dissociate themselves from any unregistered entity using their name, product or service.
Finfluencers are usually unregistered entities providing catchy content, information, and advice on various financial topics to several followers. While some of them may be genuine educators, many of them are unauthorised investment advisers or research analysts.
Besides undertaking enforcement action against unregistered finfluencers who breach SEBI regulations, the paper also proposed to disrupt the revenue model for such finfluencers, so that the perverse incentives in the ecosystem are reduced.
Comments on the paper may be submitted by September 15, 2023.
