Mumbai: The Securities and Exchange Board of India (Sebi) has proposed making it mandatory for all regulated financial entities to display their names and registration numbers on the home page of their social media handles and in every social media post, in a move to curb misleading investment content online.
In a consultation paper released on Friday, the market regulator stated that there is a need to distinguish between content posted by entities regulated by the Sebi board, such as mutual funds, brokers, and distributors, and that posted by unregulated entities.
Though the proposed norms will help identify registered entities, it does not do much for the plethora of content by unregulated ones. “This move would curb misleading posts by fraudsters and imposters, but the onus of verification is left to the investor watching the content on social media,” said Vishal Bedse, investment advisor at ICICI Investment Management Company.
“Fraudsters/unregistered persons have been perpetrating frauds in the securities market in various forms, including by way of misleading/manipulative social media content etc.,” the regulator said in the paper.
As per the proposal, regulated entities would be barred from the following:
- Publishing content that contains statements that directly or by implication mislead an investor or that exploit the lack of knowledge of an investor.
- The content cannot promise risk-free or assured returns and cannot refer to the past performance of the entity until permitted by the regulator.
- The content also cannot use the Sebi logo or refer to any Sebi office or officer.
Sebi has been making efforts to curb the spread of misleading content that can cause financial losses for investors.
The regulator has escalated more than 100,000 instances of unlawful or misleading online content to platform providers including Meta, Google, Telegram and X for appropriate action, said Sebi chairman Tuhin Kanta Pandey at an event on Thursday.
“Today, regulated entities are no longer permitted to associate with unregulated advisors on social media, helping prevent the spread of false claims and harmful influence,” he added.
The influence of social media content on investors was established by the regulator through a survey last month.
The survey showed that as many as 62% of retail investors now rely on finfluencer or financial influencers recommendations for their investment decisions, bypassing formal advisory channels and underscoring a deepening trust gap in the traditional system.
This was Sebi’s first comprehensive study in a decade, conducted by Kantar across more than 90,000 households.
The perceived credibility of these influencers is exceptionally high, with 93% of their followers finding them “moderately to highly” credible.
Sebi has not mentioned a deadline for submission of stakeholder feedback on the proposal.
