Market regulator SEBI is working on framing guidelines to govern social media influencers that give financial advice by using simple language, breaking down the difficult market jargon and telling you where to put your hard-earned money in the stock market.
This comes after SEBI witnessed an exponential rise in the number of various 'unregistered' investment advisors giving unsolicited social media 'stock' tips on various platforms including Telegram, Facebook, Youtube, WhatsApp, Instagram.
These guidelines are required because there is a lot of ambiguity over these influencers' credibility, their licence and qualification.
According to reports the impact of their advice has been detrimental at times, especially in some recent startup listings. People have lost their precious money. Moreover, there have been instances of influencers being paid by companies to endorse their stocks, without any disclaimers.
It is important to note that SEBI’s rules require financial advisors to register themselves or issue disclaimers and there are about 1,300 registered investment advisors in India.
Data from the Advertising Standard Council of India shows that in FY22, there were 415 instances of violations by influencers and celebrities in finance and cryptocurrency-related content. These statistics and recent trends have brought the spotlight once again on financial influencers and why regulation is the need of the hour.