A ban on regulated entities associating with unregistered financial influencers, or “finfluencers” has been approved by the Securities and Exchange Board of India with immediate effect.
SEBI Restricts Regulated Entities from Associating with Unregistered Individuals and ‘Finfluencers’
The market regulator said in a statement that the regulated persons and their agents cannot engage in transactions involving money or money’s worth with unregistered individuals, adding that they cannot refer clients to these individuals.
Also, they cannot interact with these individuals’ IT systems.
SEBI said that regulated persons as well as their agents are asked to not associate in any form with anyone providing financial advice or making return claims, until and unless it is permitted by the board.
In addition to this, any association of similar nature or character, directly or indirectly, with ‘finfluencers’ has been prohibited.
SEBI’s Stringent Regulations and Oversight in Financial Advice and Securities
This ban extends and applies to all those who are providing advice, making recommendations, or claiming returns or performance related to securities. Only in the case where the board itself permits such advice or recommendations, shall the exceptions be made.
The board has also directed the registered entities, that they must ensure that their associates do not engage in prohibited activities.
Last month, SEBI introduced regulations requiring IPO-bound firms to create audio-visual presentations of public issue disclosures. These presentations advise investors against relying on external information.
This move is part of SEBI’s broader plan to regulate ‘finfluencers’ and introduce a performance validation agency to verify claims of higher returns made by these influencers.
