Why SEBI has joined hands with Google and Telegram
What's the story
The Securities and Exchange Board of India (SEBI) is working with major social media platforms such as Google and Telegram to curb the activities of unregistered financial influencers (finfluencers). These are individuals who provide investment and stock market advice without being registered with SEBI. The market regulator's main goal is investor protection through education and awareness.
Strategic approach
Talks ongoing with other platforms as well
In response to queries about how it plans to deal with unregistered finfluencers on social media, SEBI said it is grateful to all those cooperating in reducing this risk. The regulator also revealed that talks are ongoing with other social media platforms as well.
Cooperation
Positive reaction from social media platforms
According to Moneycontrol, social media platforms have been largely cooperative and have responded positively to SEBI's efforts. It is expected that most of these platforms will take some measures to prevent misuse by elements harming investors. Platforms that don't comply with these measures may lose business with SEBI-regulated entities, as these entities may prefer working with platforms aligned with SEBI's goal of curbing unregistered finfluencers.
Regulatory measures
Prohibition on associations with unregistered finfluencers
SEBI's regulations prohibit regulated entities from associating with unregistered finfluencers for monetary relationships, digital collaborations, or marketing/referral fee arrangements. This applies to both direct and indirect associations. The aim is to prevent sponsorships/other fee income via endorsements that finfluencers might receive for promoting investment products/services. In its amended intermediary regulations, SEBI has clarified the meaning of association in this context.
Platform guidelines
Restrictions don't apply in these cases
SEBI has clarified that the restrictions on associations with unregistered finfluencers do not apply in cases where such associations are made through a specified digital platform. A specified digital platform is one that has measures to take preventive and curative action, ensuring it is not used for giving tips/advice related to securities unless the person is registered with SEBI, and makes claims of guaranteed returns or unreasonable performance.