Regulatory crackdown fails to deter finfluencers; only 6% are SEBI-registered

It analysed 48 finfluencers providing financial advice between January and October 2025. It flagged that 16 of these influencers provided explicit recommendations of securities, of which only two turned out to be SEBI-registered.

The findings highlight gaps in the regulatory framework, with finfluencers continuing to provide stock recommendations and tips on social media platforms. This poses risks to people who lack financial education, as these individuals often build an online image of being trustworthy financial advisors.

Current regulations, finfluencers favour Instagram

Under the current regulations, individuals providing any recommendation or financial advice are mandated to be registered with the regulator as a research analyst (RA) or an investment advisor (IA).

Individuals are required to meet a certain threshold for the net worth and have educational qualifications in the financial field to qualify as an IA or RA. Unregistered individuals providing just financial education through their content are mandated to use older financial data to avoid real-time stock tipping disguised as education.

The findings indicate only a slight progress from the institute’s previous study in 2025, which had seen just 2% of finfluencers registered with the regulator compared to 6% currently.

Instagram is the most popular platform for these influencers, with YouTube playing a big role as well, according to the report. Short-format content such as reels is the most popular form of communication, with other formats such as shorts, videos, and podcasts.

“See, it is blatant that finfluencers continue to shape the narrative despite regulatory crackdown. This includes providing unsolicited financial advice, or failing to disclose paid partnerships. They always make money, while the common public are the ones losing,” said a legal expert at a domestic law firm.

The report found over one-third of the finfluencers it sampled faced conflict of interest issues, and failed to adequately disclose conflicts such as sponsored content or affiliate marketing. Many also did not educate their audience about important factors such as lock-in periods, and fees while recommending investments.

SEBI regulations need more work

SEBI has tightened regulations around such finfluencers masquerading as advisors in recent years, barring financial institutions from partnering with unregistered financial advice providers. It has also mandated that only historical data be used for educational purposes, restricted investment advice to registered IAs and RAs, and imposed penalties on those violating these requirements.

The regulator had passed an order to impound around Rs 600 crore from stock market educator Avdhut Sathe and his company Avadhut Sathe Trading Academy Pvt Ltd, in December 2025 for providing unauthorized investment advice. It had impounded around Rs 5 crore from “options queen” Asmita Patel in February 2025, banning her, her husband, and her institute from dealing in the stock market.

Legal experts believe SEBI has done meaningful work but has a long way to go. “Social media influence often reaches investors before the legal line is formally tested. The next step should be to move some safeguards upstream: verified registration badges for market content creators, mandatory ‘registered/unregistered’ labels, standardised sponsorship disclosures, stronger platform-level detection and takedown processes for repeat violators, and clearer consequences where education repeatedly slips into recommendations,” said Apurva Kanvinde, partner at legal firm Juris Corp.

The regulator also needs to improve the disclosure norms for educational creators to spread financial literacy while cracking down on “stock-tips” and other such recommendations, according to Kanvinde.