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MUMBAI : The Securities and Exchange Board of India (Sebi) on Thursday said it is working on a set of guidelines for financial influencers, or finfluencers, giving unsolicited financial advice on social media platforms.

“We are working on guidelines for financial influencers," Sebi whole-time member S.K. Mohanty said on the sidelines of the Confederation of Indian Industry National Conference on ‘Corporate Frauds: Governance’ held in Mumbai on Thursday.

The markets regulator has witnessed an exponential rise in the number of unregistered financial advisors, offering stock tips on platforms such as Telegram, Instagram, WhatsApp, Facebook, and YouTube. Besides, there have been many reports of companies approaching these influencers, with considerable following on Instagram, Twitter and Facebook, to endorse their stocks.

The regulator must take a ‘segmented’ stance to address the menace of unsolicited stock tips on social media, Sebi chairperson Madhabi Puri Buch had said at a board meeting on 30 September. “I think it’s early days given the complex nature of this issue. We are in discussion with the industry and various stakeholders and it will take us sometime. We do not have visibility on an easy solution yet," she said.

On 10 March,Sebi cracked down on market operators for allegedly manipulating stocks through social media. It carried out searches at the premises of at least seven individuals and one company across several locations in Ahmedabad and Bhavnagar in Gujarat, Neemuch in Madhya Pradesh, New Delhi, and Mumbai.

“Sebi is receiving information that messages with stock tips and investment advice with respect to selected listed companies are being widely circulated through websites and social media platforms", the regulator had said.

In January, Sebi had come up with an order against six individuals who were involved in offering unsolicited stock recommendations using social media channels to manipulate stock prices and make illegal profits. They were all barred from dealing, selling or accessing the capital markets and fined 2.84 crore.

Sebi said the perpetrators were taking purchasing shares in small-cap companies in bulk and then sending messages via social media indicating strong possibilities of a rise the price of the shares to prompt people to buy the stocks.

ABOUT THE AUTHOR

Priyanka Gawande

Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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