Will frame rules to control financial advice from social media influencers: Sebi

Addressing a meeting of the Association of Registered Investment Advisers on Friday, Sebi whole-time member Ananth Narayan Gopalkrishnan said some unscrupulous people are misusing their Sebi registration to further their businesses and as the regulator “we don’t want (that) to happen”.

“We’ll come out with a discussion paper seeking inputs for making effective measures to control unsolicited financial and market advises from social media influencers and also from unregulated investment advisors. After inputs from market participants, and other stakeholders, we’ll issue guidelines to rein them in,” Gopalkrishnan said.

There is also the issue of unregistered investment advisors, who pose greater risks to gullible investors. More important, “we see examples of misuse of their Sebi registrations by even some registered advisors,” he said.

“We want self-regulatory bodies to evolve so that some bodies beyond Sebi can do the policing. We’re concerned about unregistered investment advisors and the social media is enhancing that,” he noted.

Sebi’s proposal comes against the backdrop of many social media influencers providing advice about stock investments without a licence.

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Earlier, Sebi clamped down on some Whatsapp groups and Telegram channels, which were used to leak key market moving data.Disclose paid ads

ET reported on January 21 that social media influencers will soon have to mandatorily disclose sponsored posts as paid content if there is a material connection between them and a brand, failing which, they can be prohibited from publishing for six months and face a penalty of Rs 10 lakh and upto Rs 50 lakh for repeated offence, according to the new social media influencer guidelines published by the government.

The association with advertisers should be displayed in a “hard to miss” format, said Rohit Kumar Singh, secretary, ministry of consumer affairs, while releasing the guidelines.

Disclosures should be made in the language same as the promotion, should be superimposed over the image enough for viewers to notice, should be placed in the video and not just in the description, and should not be mixed with a group of hashtags or links, said Nidhi Khare, additional secretary, ministry of consumer affairs.