SEBI Bans Regulated Entities From Associating With Unregistered 'Finfluencers'

The Securities and Exchange Board of India on Thursday approved a ban on regulated entities associating with unregistered financial influencers, or "finfluencers," effective immediately.

Regulated persons and their agents cannot engage in transactions involving money or money's worth with unregistered individuals, the markets regulator said in a statement., adding that they cannot refer clients to these individuals. They also cannot interact with these individuals' IT systems.

Regulated persons and their agents shall not associate in any form with anyone providing financial advice or making return claims unless permitted by the board, SEBI said.

Additionally, SEBI prohibited any other association of a similar nature or character, directly or indirectly, with 'finfluencers.' This ban applies to those providing advice, making recommendations, or claiming returns or performance related to securities. Exceptions are allowed only if the board permits such advice or recommendations.

SEBI also emphasised that registered entities must ensure their associates do not engage in prohibited activities.

Last month, SEBI introduced regulations requiring IPO-bound firms to create audiovisual 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.