In a significant move, the Securities and Exchange Board of India (SEBI) on Thursday approved norms to regulate misinformation through financial influencers or finfluencers by restricting association of its regulated entities with any unregistered person.
In its board meeting the market regulator said, “The persons regulated by the Board and the agents of such persons shall not have any association, like, any transaction involving money or money’s worth, referral of a client, interaction of information technology systems or any other association of similar nature or character, directly or indirectly with any person who directly or indirectly provides advice or recommendation.”
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SEBI has provided a window for investor education from such associations with a condition that they do not provide any recommendation or claim any return or performance.
This ensures that mutual funds, stock brokers, research analysts, or registered investment advisors do not associate with finfluencers.
It has also introduced flexibility in the voluntary delisting framework by introducing a fixed price process as an alternative to reverse book building process. The market regulator also provided an alternate framework for the delisting of investment holding companies.
Sebi also provided certain funds exemption from granular disclosures under the Foreign Portfolio Investor (FPIs).
Financial influencers are persons who provide advice on social media platforms on various financial topics such as investing in securities, personal finance, banking products, insurance and real estate investment, among others.
In recent years, finfluencers have drawn a lot of flak for misguiding and exploiting gullible investors and traders. Some have resorted to practices that can be outright unethical or even illegal.
