The Securities and Exchange Board of India (SEBI) has taken a major step towards safeguarding investors by issuing a circular on January 29, 2025, prohibiting regulated entities from associating with unregistered financial influencers (finfluencers).
- No Association with Unregistered Finfluencers:
SEBI mandates that intermediaries such as brokers, investment advisers, research analysts, and mutual funds must not enter into any agreement, financial arrangement, or partnership with finfluencers who are not registered with SEBI.
- No Indirect Promotions or Referral Links:
Regulated entities cannot indirectly support or promote content by unregistered finfluencers, including sharing referral links, paid collaborations, or offering incentives.
- Stricter Compliance for SEBI-Registered Entities:
Intermediaries must ensure that any financial content associated with their services aligns with SEBI regulations and does not mislead investors.
- Investor Protection Focus:
The circular emphasizes that only qualified and SEBI-registered professionals should provide financial advice, reducing the risks associated with speculative or misleading recommendations.
- Penalties for Non-Compliance:
Any violation of this circular could lead to severe regulatory actions, including fines, suspensions, and cancellation of registrations.
SEBI’s Intent Behind the Circular
With the rise of social media and digital finance content, many unregistered individuals have started providing investment advice without proper qualifications. Some of these influencers promote high-risk strategies, misleading claims, and even fraudulent schemes. SEBI’s January 29, 2025 circular aims to:
- Safeguard investors from misleading financial advice.
- Enhance market transparency by ensuring only qualified individuals provide investment guidance.
- Prevent financial scams involving unverified investment schemes.
Impact on SEBI-Registered Entities
For SEBI-registered intermediaries, this circular means they must: ✔ Review existing collaborations and terminate any engagement with unregistered finfluencers. ✔ Ensure content compliance by verifying that financial promotions align with SEBI guidelines. ✔ Educate investors on the importance of seeking advice from SEBI-registered professionals.
Final Thoughts
For SEBI-registered intermediaries, compliance with this circular is crucial to maintain credibility and avoid regulatory repercussions. If you need guidance on ensuring compliance with SEBI’s regulations, feel free to reach out for expert consultation.
Stay informed, stay protected!
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