22 Sept 2023
SEBI limited the number of interactions between its regulated entities and unregistered finfluencers. It plans to ban unregistered finfluencers from partnering with mutual funds and stockbrokers from promotional activities.
Striking a whiplash on financial influencers, or finfluencers, the Securities and Exchange Board of India (SEBI) proposed new guidelines on August 25th.. It invited all finfluencers to register before partnering with SEBI-registered financial businesses for marketing or knowledge-sharing through social media posts.
It asked registered entities not to share confidential information with unregistered finfluencers and companies. It intends to disrupt the referral-based commission system that forms a significant revenue model for the finfluencers. However, it will allow registered entities a limited number of referrals.
So, only those certified by SEBI can become financial gurus. It is bound to curb the mushrooming of financial advisors offering misleading or biased financial advice to lure customers. SEBI has already banned finfluencers like P.R. Sundar, with a million followers, from the securities market for providing investment advisory without proper registration and asked him to pay back over ₹6 crore fees and interest.