Regulating Finfluencers: SEBI walks the walk

financialexpress.com:

Driven by rising concerns about investor protection in this digital age, the Securities and Exchange Board of India (SEBI) has released the much-awaited consultation paper on the association of SEBI registered intermediaries/ regulated entities with unregistered entities including ‘finfluencers’.

While SEBI continued to crack down on firms and unregistered entities or finfluencers who make use of social media for providing unsolicited trading tips, this is the first formal step to directly address the conduct of finfluencers. 

On April 5, 2023, SEBI introduced an Advertisement Code (the “Advertisement Code”) for SEBI registered Investment Advisers (“IAs”) and Research Analysts (“RAs”). 

IAs and RAs are governed by and are required to be registered with SEBI under the SEBI (Investment Advisers) Regulations, 2013 (“IA Regulations”) and SEBI (Research Analyst) Regulations 2014 (“RA Regulations”), respectively. While IAs are registered with SEBI to engage in the business of providing personalized investment advice based on aspects such as the client’s financial situation, goals, etc. for a consideration, RAs are registered persons considered experts who publish research reports or recommendations on the subject without any client-specific considerations.

Also Read: Finfluencers have been making a lot of money by enticing followers. SEBI decides to curb their income

From May 1, 2023, IAs and RAs are required to comply with the Advertisement Code while issuing any ‘advertisement’ – which includes all forms of communications, issued by or on behalf of an IA/RA, that may influence investment decisions of any investor or a prospective investor. The code mandates certain disclosure requirements and issuing standard warnings about