The Securities and Exchange Board of India (Sebi) is working on guidelines for financial influencers — popularly known as ‘finfluencers’ — who give advice to stock investors on various social media platforms like Twitter, Youtube, Instagram and Facebook.
“We are working on the guidelines for financial influencers,” Sebi Whole-time Member S K Mohanty said on the sidelines of a CII conference on ‘Corporate Frauds: Governance and Risk Management’. The Sebi move follows a sharp rise in the number of various ‘unregistered’ investment advisors giving unsolicited social media ‘stock’ tips on various social media platforms. There were also reports that certain companies used social media platforms to boost their share prices through such finfluencers. Finfluencers are people with public social media platforms offering advice and sharing personal experiences about money and investment in stocks. Their videos cover budgeting, investing, property buying, cryptocurrency advice and financial trend tracking.
Mohanty said frauds are neutral and can take place in any company irrespective of whether it is listed or not, more so, in the wake of instances of digital data thefts and technological risks. He expressed concern on eroding trust of retail investors against the backdrop of an increasing capital markets investor base.
He said the rate of corporate frauds is increasing at a high pace. Stating that the Sebi has been constantly upgrading surveillance and technology, he said diversion of funds/ assets not only leads to erosion of wealth for shareholders, creates anarchy and financial crisis but also leads to ethical crisis and reputational risk.
Some of these finfluencers have lakhs of followers with their investment advice being closely followed by millions of people across the country. They post videos in English, Hindi and a mix of English and Hindi. What has raised concern is that scamsters are using this route to manipulate share prices. “Saw an article by an online portal claiming that finfluencers get paid Rs 7 to 9 lakh per endorsement to push financial products on social media. All investors, please do your own due diligence and check the credentials of financial influencers giving the advice,” a fund manager tweeted.