SEBI Removes 15,000 Finfluencer Content Sites to Protect Investors

Sebi has taken a significant step to protect investors from misleading financial advice by cracking down on unregulated financial influencers, or ‘finfluencers’. The securities regulator has removed over 15,000 content sites created by these influencers in the past three months alone.

This action aligns with Sebi’s decision in July to prohibit regulated entities from associating with finfluencers. The regulator has introduced strict guidelines to prevent mutual fund houses, research analysts, registered investment advisors, and stock brokers from partnering with these influencers.

The new regulations stipulate that regulated entities and their agents cannot have any direct or indirect association with individuals or entities who provide financial advice or make performance claims without Sebi’s permission. This includes monetary transactions, client referrals, or IT system interactions.

While the move aims to safeguard retail investors from biased or misleading information, Sebi has also provided a small window for investor education through such partnerships. However, finfluencers involved in these collaborations must refrain from providing any recommendations or making performance claims.

The rise of finfluencers has raised concerns about the potential risks associated with their unregulated activities. These influencers often work on a commission-based model, which can incentivise them to provide biased or misleading advice to attract more customers.

In June, Sebi laid the groundwork for regulating finfluencers by barring regulated entities from engaging with them. This move was aimed at ensuring that all financial influencers operate under a regulated framework.

Sebi’s crackdown on unregulated finfluencers is a crucial step towards protecting investors and maintaining the integrity of the financial markets. By preventing regulated entities from associating with these influencers, Sebi is working to ensure that investors receive accurate and unbiased financial advice.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.