
The Securities and Exchange Board of India (SEBI) has proposed a draft circular to curb financial influencers, or "finfluencers," from providing stock recommendations under the pretence of educational content. This was stated in a report by The Statesman.
Announced on January 30, the new guidelines prohibit the use of real-time share price data in any form that may suggest investment advice. “A person engaged solely in education shall mean that such person is not engaged in any of the two prohibited activities. 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,” said the circular.
SEBI has made it clear that only registered advisors can offer guidance on securities. Additionally, unregistered finfluencers are banned from making any direct or indirect claims about returns or investment performance. “These regulations have come into force with effect from August 29, 2024,” the notice read further.
Violators of these guidelines face strict penalties, including fines, suspension, cancellation of registration, or a complete ban. SEBI has also extended its crackdown to registered market entities, preventing them from associating with unregistered finfluencers for any form of financial or non-financial compensation.
The regulator first imposed restrictions on collaborations between registered and unregistered entities in an October 2024 circular. The latest update further tightens compliance, reinforcing SEBI’s stance against unregulated financial advisory services.
While investor education remains permitted, educators must refrain from making investment recommendations or performance claims without SEBI’s explicit approval. Market participants regulated by SEBI are also responsible for ensuring their agents and associates do not violate these prohibitions.