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Journalism of Courage
The Securities and Exchange Board of India (Sebi) is working on guidelines for financial influencers — popularly known as “finfluencers” — who give advice to stock market investors on various social media platforms like Twitter, Youtube, Instagram and Facebook.
“We are working on the guidelines for financial influencers,” Sebi Whole-time Member S K Mohanty said on the sidelines of a CII conference on ‘Corporate Frauds: Governance and Risk Management’.
Finfluencers are people with public social media platforms offering advice and sharing personal experiences about money and investment in stocks. Their videos cover budgeting, investing, property buying, cryptocurrency advice and financial trend tracking.
The Sebi move follows a sharp rise in the number of various ‘unregistered’ investment advisors giving unsolicited social media ‘stock’ tips on various social media platforms. There were also reports that certain companies used social media platforms to boost their share prices through such finfluencers.
More often than not, it is unclear if these influencers have any educational or professional qualification to offer such financial advice, and if there is any kind of monetary transaction that happens between them and the entity they are promoting.
Some of them have lakhs of followers with their investment advice being closely followed by millions of people across the country. They post videos in English, Hindi and a mix of English and Hindi. What has raised concern is that scamsters are using this route to manipulate share prices.
“Saw an article by an online portal claiming that finfluencers get paid Rs 7 to 9 lakh per endorsement to push financial products on social media. All investors, please do your own due diligence and check the credentials of financial influencers giving the advice,” a fund manager tweeted.
In February, the Advertising Standards Council of India (ASCI) released new guidelines for social media influencers and other advertisers about publishing ads about virtual digital assets (VDA) including cryptocurrencies and non-fungible tokens (NFTs), in line with the government and Reserve Bank of India’s long held stance on cryptocurrencies.
Per the guidelines, all advertisements for VDA products, VDA exchanges or featuring VDAs should carry a disclaimer that says, “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions”.
Earlier this week, ASCI also released its half yearly report of complaints its received between April-September 2022, detailing social media influencers that were found to be non-compliant with its advertising guidelines.
Among those that allegedly violated its guidelines was a top Bollywood actor who posted an ad about ‘Beyond Life NFT’. ASCI said that between April 2022 and September 2022 it processed 781 complaints against social media influencers of which around 2 per cent were related to ads about financial instruments, mostly cryptocurrencies.
