Sebi imposes strict guidelines on finfluencers: No live share price, stock tip restrictions & more

Sebi has issued restrictions for finfluencers providing stock tips on social media platforms as investor education.

Stock prices used in investor education must be three months old; live prices cannot be used.

Additionally, the registered entities are not allowed to pay influencers for direct or indirect 'association'. These regulations have been in force since August 29, 2024.

"It is the responsibility of the persons regulated by Sebi to ensure that any person associated with them or their agent, directly or indirectly, does not engage in any of the abovementioned two prohibited activities, directly or indirectly," Sebi said.

“Such person should not be using the market price data of the preceding three months to speak/talk/display the name of any security including using any code name of the security in his/her talk/speech, video, ticker, screen share etc. indicating the future price, advice or recommendation related to security or securities,” the market regulator added.

Prohibited activities by Sebi

• Giving any recommendation or advice on specific stocks either directly or indirectly without the permission of the market regulator.
• Making claims of returns or performance expressly or impliedly on any security without the permission of Sebi.

Other restrictions

• Sebi norms will be violated if any entity regulated by Sebi is indirectly associated with an entity engaging in the above-mentioned prohibited activities.
• Sebi's restrictions will apply to advertisements, branding and promotional material sourced through third-party marketing agencies as well.

"Persons regulated by the Board and their agents have been advised through a circular dated October 22, 2024 to terminate their existing contracts, if any, with persons engaged in any of the above-mentioned two prohibited activities, directly or indirectly, within three months from the date of issuance of that circular," Sebi said.

What happens if regulation is violated?

The market regulator on the basis  of inquiry will impose a penalty, suspend or cancel the license on violation of norms.

“Potential actions could include penalty, suspension/cancellation of registration, debarment etc,” Sebi said.