SEBI cracks down on misleading financial content across social media 

The Securities and Exchange Board of India (SEBI) has flagged 8,890 instances of unlawful or deceptive content on social media, prompting action against the accounts spreading false information. SEBI has formally alerted major platforms, including Facebook, Instagram, Telegram, and YouTube, urging them to implement stringent legal measures against those disseminating misleading stock market claims. 

As of July 17, 2024, SEBI has reported 8,890 pieces of misleading content related to the securities market to the relevant social media platforms for necessary legal action. This information was conveyed to the Rajya Sabha on July 30. 

Over the past year, SEBI has actively intervened to curb the spread of illegal stock advice and misleading content from financial influencers, commonly known as finfluencers. These self-proclaimed experts have been issuing stock tips and investment advice without proper registration, posing significant risks to investors. SEBI has identified several tactics used by these influencers, including false promises of guaranteed returns, the use of complex technical jargon to confuse investors, and misleading testimonials in social media posts and advertisements.  

The rise of social media influencers has significantly impacted the Banking, Financial Services, and Insurance (BFSI) sector. According to the 2024 Influencer Marketing Report, the BFSI sector accounts for nearly 15.4% of India’s influencer marketing landscape. A separate report by “The Advertising Standards Council of India” (ASCI) reveals that 79% of internet consumers trust social media influencers, with 30% expressing complete trust in them. 

To address this growing issue, SEBI has introduced a regulatory framework to prevent entities from collaborating with unregistered financial influencers. Under the new regulations, registered entities are prohibited from associating with unregistered financial promoters on social media platforms to make promotional claims or offer financial advice. 

These restrictions prevent SEBI-regulated entities and their agents from engaging directly or indirectly with any individual or entity offering financial advice or making performance claims without SEBI’s authorization. The prohibitions extend to any form of monetary transactions, client referrals, or IT system interactions.