SEBI, the markets regulator in India has warned Ola Electric for announcing information about its firm on social media before making a disclosure to investors.
What are SEBI norms on Social Media Content?
- Unregistered financial influencers
- SEBI, India’s securities and commodity market regulator, has suggested the end of unregistered financial influencers’ social media content.
- SEBI identifies these influencers as practices to persuade the public into investing in the stock market.
- SEBI, India’s securities and commodity market regulator, has suggested the end of unregistered financial influencers’ social media content.
- Draft Circular for Specified Digital Platforms (SDP Circular)
- The SEBI published a Consultation Paper on the Draft Circular for Specified Digital Platforms (SDP Circular) on 22 October 2024 to safeguard the public from financial and securities advertisements by unregistered individuals.
SEBI Introduces Fixed Price Process for Delisting Shares
- SEBI introduces a fixed price process for delisting frequently traded shares and a delisting framework for Investment and Holding Companies (IHC).
- The move comes amid concerns over potential risks associated with unregulated finfluencers offering biased or misleading advice.
Understanding Financial Influencers
- Financial influencers provide information and advice on financial topics, primarily on social media platforms.
- Income sources include advertisements, collaborations to promote financial products, and affiliate partnerships.
Rise of Finfluencers
- Finfluencers help educate and create awareness among new investors because of India’s low financial literacy rate.
- Increased retail investment and the pandemic have increased demand for financial advice.
- Technological advancements and affordable smartphones have enabled finfluencers to reach through social media platforms.
Problems from Rise of Finfluencers
- Lack of regulation makes it hard to evaluate the expertise and qualification of the finfluencer.
- Company manipulation of markets can lead to losses.
- Some high-risk investment products may be presented without adequate disclosures of risks involved.
- Quality and reliability of the financial advice tend to be compromised due to content-first approach.
- Social influence may be diluted by promoting the stocks in favor of personal gain.
Regulatory Action Previously Taken for Finfluencers:
- SEBI Regulations 2013 frames the guidelines of financial advice providers.
- ASCI revised guidelines require SEBI registration for influencers.
