SEBI cracks down on FinFluencers
SEBI has taken strict action against unregistered financial advisors
Sebi chairperson Madhabi Puri Buch
New Delhi: Market regulator SEBI has now cracked down on finfluencers. The regulator has instructed stock brokers and mutual funds not to use unregulated financial influencers in their marketing and advertising campaigns.
Unregulated finfluencers refer to influential individuals who provide investment advice on platforms like Telegram and Instagram without being registered with the regulator. This potentially impacts millions of retail investors involved in shares, futures and options trading. SEBI has introduced new measures to protect ordinary investors from these finfluencers.
The Securities and Exchange Board of India (SEBI), has initiated a special arrangement for Investment Advisors (RIA) to charge fees from clients. This arrangement will be a website that collects fees from clients and oversees their investment advisors.
The motive behind introducing this platform is to ensure that if your investment advisor is listed on the website, they are genuinely registered with SEBI. This arrangement also includes research analysts and will facilitate communication between investors and registered entities, also helps build trust and transparency.
There will be no fee for ordinary investors to use this facility, therefore avoiding any additional burden on them. However, registered investment advisors will also need to pay a minimum fee of ₹4,000 annually to utilize this facility.
SEBI states that fee collection under this mechanism is optional. Earlier reports suggested that SEBI might make it mandatory for all registered investment advisors to join this system. But now, it’s up to the advisors whether they want to participate in this arrangement or not.
SEBI Chairman Madhabi Puri Buch has stated that “joining this platform will be beneficial for registered advisors. It will establish their authenticity and credibility.”
SEBI’s strict stance on Finfluencers
SEBI has recently taken strict actions against unregistered advisors. Recently, Mohammad Nasiruddin Ansari, who ran a channel named ‘Baap of Chart,’ was banned from the stock market. He was also ordered to refund ₹17 crores collected from followers. Another finfluencer, P.R. Sundar, faced similar action as well. Many finfluencers have engaged in trading courses on the pretext of recovering their losses, cautioning investors multiple times to avoid unregistered finfluencers.
Every person providing investment tips should be a registered investment advisor. It is not necessary for every advisor to be registered with SEBI. You should ask them for their RIA registration number and verify it on SEBI’s website. According to the rules, only SEBI-registered RIAs have the right to manage people’s financial planning and investments. Don’t risk your hard-earned money by getting caught up in advices given by finfluencers on social media.
Published: June 29, 2024, 13:55 IST