Swara Garge, Pune
The Securities Exchange Board of India (SEBI) published a consultation document on the collaboration between registered intermediaries and ‘finfluencers’ (finance influencers). This decision was made in light of the recent widespread media and public attention that these influencers community have received.
The article discussed unregistered companies and finfluencers that solicit their followers to buy goods, services, or stocks in exchange for covert payments from platforms or creators.
Retail investors and the general public are invested in their financial advice and market predictions. According to the paper, finfluencers are those who share knowledge on numerous financial subjects via social media sites like Instagram, Facebook, YouTube, LinkedIn, and Twitter, including investing in securities, personal finance, banking goods, insurance, and real estate. These influencers have the power to affect their followers’ financial choices without any authenticity in their judgment.
In order to eliminate the ecosystem’s flawed incentives, SEBI is looking at a solid plan of action. Consultation paper by the regulator suggests that disrupting the revenue mechanism for these finfluencers can help break the cycle. Additionally, it stated that all unregistered influencers who violate SEBI regulations would face repercussions. SEBI also issued a directive stating that all organizations registered with or governed by SEBI stock exchanges or AMFI shall not divulge any client information to any unregistered organizations.
“No SEBI registered intermediaries/regulated entities or their agents/representatives shall, directly or indirectly, have any association/relationship in any form, whether monetary or non-monetary, for any promotion or advertisement of their services/products, with any unregistered entities (including finfluencers),” the SEBI release stated.
According to SEBI, because these finfluencers are not subject to the market regulator’s code of conduct, they are not required to disclose any potential conflicts of interest, such as their affiliation with or ownership of the goods, services, or securities they are promoting.
In such cases, “Such entities shall comply with the advertisement guidelines issued by SEBI, stock exchanges, and SEBI-recognized supervisory body from time to time,” the market regulator stated. Public feedback on the ideas is being sought by SEBI, and it must be received by September 15 in order to be considered.