The Securities and Exchange Board of India (Sebi) has revised regulations to address concerns over unregistered financial influencers, or "finfluencers," who may pose risks due to unverified advice.
In three separate notifications issued on Friday, Sebi has restricted associations between its regulated entities—such as mutual fund houses, research analysts, registered investment advisors, and stock brokers—and unregistered individuals.
The new rules prohibit these entities from engaging in transactions or sharing information technology systems with anyone who provides financial advice or claims returns without Sebi registration.
Sebi’s move follows board approval of the proposal last month.
The regulations stipulate that no person regulated by Sebi or their agents can have any direct or indirect association with unregistered individuals who offer advice or make performance claims related to securities, unless these individuals are registered or permitted by Sebi.
The new framework aims to set standards for accountability and expertise, ensuring that finfluencers are properly regulated.
While the rules prohibit partnerships for advice and return claims, they allow limited collaboration for investor education, provided the finfluencers do not make any recommendations or claims of returns.
This regulatory update responds to growing concerns about the impact of unregulated finfluencers, who often operate on a commission basis and can influence financial decisions through biased or misleading advice.
The amended norms apply to depository participants, intermediaries, and securities contracts, marking a significant step towards increased oversight and accountability in the sector.
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