SEBI's consultation paper on finfluencers: here's what Sandeep Parekh, Nithin Kamath say

livemint.com:

capital market regulator Securities Exchange Board of India (SEBI)published a consultation paper on regulating finfluencers. The SEBI published a consultation paper in August on the affiliation of registered intermediaries with "finfluencers," or digital and social media influencers who primarily operate in the fields of business and financial literacy.

The decision was made in response to the finfluencers' recent rise in popularity and media attention, as well as a subsequent increase in fraud cases and the spread of incorrect financial advice on digital platforms like YouTube, Instagram, and X (previously Twitter). The challenges of regulating finfluencers were discussed today by Nithin Kamath (Founder & CEO) of Zerodha, Abid (Co-founder & CEO of Sensibull), and Sandeep Parekh (Managing Partner of Finsec Law) on a Podcast.

Let's look into what they have to say broadly. According to Abid, the regulator hinted that they are worried about the financial influencers who are now playing a significant role in the business but are not subject to regulation.

The regulator has stated in the paper that they are concerned about the fact that finfluencers are receiving incentives to sell goods, services, or securities and that they want to stop this. The meta of the paper states that they attempt to stop this by disrupting the revenue model of the finfluencers, which translates to the paper saying that registered entities like brokers, RAs, RIAs, etc.

cannot give influencers any kind of incentives at all. Sandeep Parekh, said that the capital market regulator has issued a consultation document as a result of the criticism SEBI has received over the past year, which claims that they are not actually taking charge of the securities