Finfluencers naming stocks to feel heat of Sebi rule
Mint had reached out to Buch on the sidelines of an event seeking clarification on how the regulator will identify an investment educator from an influencer. The Sebi move aimed to ensure market integrity by entrusting regulated entities to ensure that people associated with them do not indulge in prohibited activities.
Apart from financial educators, Sebi also excluded digital platforms with mechanisms to take preventive and corrective action from its latest move. Also read | Sebi tweaks stocks’ F&O norms, curbs use of finfluencers Explaining Buch’s statement, Chirag Shah, senior securities lawyer, said that whatever Sebi says or prescribes will always be open to interpretation.
“What the Sebi chief may have meant is that an educator may use examples or cite company names to explain some topic and that should not lead to their losing immunity. But uttering names with recommendations suggestive of buying or selling would be considered as influencing--there is a very narrow difference", Shah said.
When asked whether Sebi should add more specifications in its circular whenever it is released, Shah responded that Sebi will have to deal with this issue on a case-specific basis. “Technically, no regulation, however verbose, is enough, and sometimes few words also suffice," the lawyer said.
Sharan Hegde, co-founder of 1% Club, a financial awareness and education platform, said that not mentioning specific names may affect the social media content of the majority of influencers. “As stated by Sebi, if mentioning any stock or the name of a mutual fund by its specific name, if that constitutes financial advice in a YouTube video or in an Instagram video, then 95% of the influencers will not be able to create content, because most
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