SEBI Cracks Down on Unregulated Financial Influencers

In a move to protect investors and promote market integrity, the Securities and Exchange Board of India (SEBI) has announced new regulations for unregistered financial influencers, also known as “finfluencers.”

Combating Unregulated Advice

The decision comes amid growing concerns about the potential risks posed by influencers who offer financial advice and recommendations without proper oversight. SEBI’s new norms emphasise ensuring all financial advice falls within a regulated framework.

Curbing Associations with Unregistered Influencers

SEBI has prohibited entities it regulates, such as brokers and their agents, from associating with unregistered finfluencers. This ban encompasses any form of financial transactions, client referrals, or interaction with information technology systems between these entities and unregulated advisors. SEBI further mandates that regulated entities ensure their associates refrain from offering financial advice or making performance claims without proper authorisation.

Exemptions and Education

The new regulations do not apply to individuals or entities solely focused on investor education, provided they abstain from offering direct or indirect financial advice, recommendations, or performance claims. Additionally, specific digital platforms with safeguards against the misuse of their services for unregulated financial advice are also exempt.

Streamlining Delisting Process

Alongside the finfluencer regulations, SEBI has introduced changes to delisting frameworks, aiming to balance ease of doing business with investor protection. The regulator has approved a “Fixed Price” process as an alternative to the “Reverse Book Building” (RBB) process for delisting frequently traded companies. This new option requires an acquirer to offer a fixed price at least 15% above the minimum price determined by Delisting Regulations.

SEBI’s Commitment to a Fair Market

These new regulations demonstrate SEBI’s unwavering commitment to fostering a transparent and investor-friendly securities market in India. By addressing the risks associated with unregulated financial advice and streamlining the delisting process, SEBI seeks to create a more robust and trustworthy investment environment for all stakeholders.

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.