SEBI Seeks Enhanced Powers to Regulate Unauthorised Financial Advice on Social Media

India’s market regulator, the Securities and Exchange Board of India (SEBI), is seeking expanded authority from the government to tackle unregulated financial advice spreading across social media platforms such as WhatsApp and Telegram. According to a news report, SEBI has requested the ability to remove misleading financial content and access call records for market violation investigations.

This is SEBI’s second such request since 2022, but government approval remains pending.

Addressing Unregulated Financial Advice

As part of its intensified crackdown on market violations, SEBI has been targeting unregulated financial advice proliferating on digital platforms. However, despite discussions with social media companies, regulators have been unable to gain access to critical communication records.

According to SEBI, platforms such as Meta-owned WhatsApp have denied access to group chat data, citing the limitations of existing information technology laws. “SEBI finds itself limited while investigating serious market violations due to the absence of power to access equivalent of call data records,” SEBI stated in its letter dated February 3.

SEBI’s Demands and Government Roadblocks

In its latest communication to the government, SEBI has requested:

• The authority to remove any misleading financial messages, links, or groups that violate securities regulations.
• The ability to access call or message data records communicated via digital and social media platforms.

Currently, such investigative powers are vested with other law enforcement agencies, including the Tax Department, Department of Revenue Intelligence, and Enforcement Directorate, but not with regulatory bodies like SEBI.

Social Media Platforms’ Response

Social media platforms have been reluctant to comply with SEBI’s demands. Telegram, in a revised statement emailed to Reuters on Friday, stated: “Telegram is fully cooperating with the concerned authorities to process their requests around content moderation or blocking groups or channels, after performing the necessary legal checks, as per the guidelines of the IT Act 2000.”

However, it clarified that it cannot provide access to call data due to its platform’s technical structure. This revision came after a previous statement issued on Thursday, which stated, “Telegram has not denied access to SEBI,” without further elaboration.

Implications for Market Regulation

SEBI’s push for broader powers highlights the regulator’s growing concerns over unauthorised financial advice that can mislead investors and impact market stability. If granted, these powers would enhance SEBI’s ability to monitor and take action against entities operating outside regulatory oversight. 

However, the ongoing tussle between regulatory authorities and social media platforms raises questions about data privacy, jurisdiction, and enforcement challenges.

With government approval still pending, it remains to be seen how SEBI’s request will shape the regulatory landscape for financial communications in India.

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