Experts divided on Sebi rules barring finfluencers from giving investment advice

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Subscribe to enjoy similar stories. Some financial influencers, or finfluencers, believe that the new Sebi rules barring regulated entities such as mutual funds and stock brokers from associating with unregistered finfluencers are ambiguously worded.

They said that the regulation can be interpreted to mean that the restriction is only on putting affiliate links on their social media platforms and not for branded marketing activities. The Securities and Exchange Board of India (Sebi) on 22 October ordered regulated entities, including recognized stock exchanges, clearing corporations, and depositories, to terminate any existing contracts with unregistered financial advisers within three months, in order to protect investors and ensure market integrity.

Sharan Hegde, co-founder of 1% Club, a financial awareness and education platform, told Mint that Sebi’s regulation that barred regulated entities from associating with unregistered content creators who offer advice or recommendations or make claims on the performance of any security, has wide interpretations. “There are technical jargons.

It says ‘finfluencers cannot do conversions but can do ‘branding’. This means the influencers are not asking investors to buy, but are just educating broadly," Hegde said.

He said that while the regulator has asked regulated entities to dissociate from finfluencers for their customer acquisition or selling promotions, it was not clear whether finfluencers could have a podcast with a particular company head, to not directly promote their products but to give general financial awareness to the public. “This comes under the bracket of branded marketing activities which ideally cannot be restricted since it would violate freedom of speech",