In a first case of action against a finfluencer (financial influencer), market regulator Securities and Exchange Board of India (SEBI) on May 25 has fined and prohibited famed YouTuber and options trader PR Sundar from trading for a year.
Defining a finfluencer
‘FinFluencer’ refers to someone who gives information and advice to investors on financial topics — usually on stock market trading, personal investments like mutual funds and insurance, primarily on various social media platforms.
He has been alleged to have violated investment advisers norms.
Goes back last year
The case against Sundar goes back to 2022 when he and his company Mansun Consulting, and co-promoter of the company Mangayarkarasi Sundar settled with SEBI complaints alleging they were providing investment advisory services without the required registration from the regulator.
The three agreed to settle to pay Rs 46.80 lakh and to disgorge Rs 6 crore, which includes profit earned from advisory services and the interest on it.
Apart from this, they have also agreed to refrain from buying, selling or dealing in securities for one year from the passing of the Settlement Order.
Sundar’s response
Following SEBI’s crackdown, PR Sundar on May 27 tweeted, “People who believe you, need no explanation. People who do not believe you, no amount of explanation will help. So keeping silence, at least for some time, is the best response.”
There were two references alleging that PR Sundar and his company were providing advisory services without obtaining the necessary registration from SEBI.
Fraudulent services
SEBI received multiple complaints which also claim PR Sundar ran a website through which he offered various packages to provide investment advice.
Investigation found that Sundar offered the advisory services via his website www.prsundar.blogspot.com.
The fees collected for his services was received via a payment gateway linked to the bank account of Mansun Consultancy Pvt. Ltd. held with ICICI Bank Ltd, according to the settlement order.
The firm recommended purchasing, selling, and dealing in securities, which was communicated to the clients — all of which comes under the purview of a registered investment advisory business.
Dangers of unregulated “finfluencers”
SEBI’s order against the finfluencer comes at a time when many registered investment advisors (RIAs) have been raising the issue of disparity in regulations for them and finfluencers.
Last month, Finance Minister Nirmala Sitharaman also brought up issues regarding finfluencers in India and warned of the dangers of Ponzi apps offering financial solutions.
There is currently no proposal to regulate “finfluencers” a word of caution is essential.
If there are three or four people giving us very objective, good advice, there are seven others out of 10 who are probably driven by some other considerations,” she said.
