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SEBI Heat on Fin-Influencers: A Call for Regulation and Responsibility

The Rise of Influencers

In today’s digital age, becoming an expert doesn’t necessarily require a degree or years of research. All it takes is a social media account and a good phone camera. These experts, known as influencers, have a significant impact on various aspects of our lives, from fashion sense to hair care routines. But what happens when they start influencing more critical areas like health or finances?

SEBI Heat on Fin-Influencers: A Call for Regulation and Responsibility

The Crackdown on Financial Influencers

The Case of Muhammad Ansari

Indian regulators are hunting down financial influencers. One of them, Muhammad Ansari, who ran a page called ‘Baap of Chart’ with around 450,000 subscribers on YouTube and 83,000 on Twitter, was banned recently.

SEBI Heat on Fin-Influencers: A Call for Regulation and Responsibility He cannot access India’s securities market and has been asked to pay a fine of Rs.17 Crores,  around $2 million. His crime? Misleading people.

Ansari claimed profits of 20 to 30%, but in reality, he has incurred major losses since 2021, around 3 crore rupees in losses.SEBI Heat on Fin-Influencers: A Call for Regulation and Responsibility

The Trend of Misleading Courses

His stock recommendations were disguised as educational courses, meaning he charged people for it. Naturally, the regulators came knocking. But this is not an isolated case. Recently, Indian regulators have cracked down on multiple influencers like PR Sundar who also gave investment tips on social media. In the end, he cut a deal with the governmentno securities trading for one year plus fines worth 6 crore rupees.SEBI Heat on Fin-Influencers: A Call for Regulation and Responsibility

The Need for Regulation

The Legal Perspective

The question arises – why is this happening? The answer lies in the legality of the situation. Not everyone can give formal investment advice to people like which stocks to invest in or which assets to buy. Only registered entities can do so, for example, a stockbroking firm or a mutual fund. But these influencers are not registered.SEBI Heat on Fin-Influencers: A Call for Regulation and Responsibility

The Question of Vested Interests

Family members and friends often give financial advice too. However, they do not have a vested interest. Some of these influencers might be getting commissions from a brokerage firm or referral fees. You cannot be sure about their motives or even how educated or experienced these people are.

The Risk of Market Manipulation

Indian regulators say influencers are promoting stocks in exchange for gains and if that happens, it is illegal. We are talking about people with millions of followers. What if these followers decided to take the advice to buy lots of stock of X or Y? Then prices will increase rapidly – it’s basically like rigging the markets.SEBI Heat on Fin-Influencers: A Call for Regulation and Responsibility

The Proposal and Pushback

The Regulators’ Proposal

The regulators’ proposal is to ask financial influencers to register themselves – no more commissions or kickbacks.

The Influencers’ Argument

But some influencers are pushing back with the argument that they are not giving financial stock advice; they are just educating people.SEBI Heat on Fin-Influencers: A Call for Regulation and Responsibility

The Role of Educational Content

There are influencers who make educational videos like how to pay your taxes or how the stock market works. They say do not club all of us together.

The Call for Responsibility

The Importance of Self-Research

While we don’t know how the regulators will handle this, one thing is clear – don’t just depend on government regulation. Yes, it is important but equally important is your own research.SEBI Heat on Fin-Influencers: A Call for Regulation and Responsibility

Recognizing Scams and Misinformation

Do your homework, read up yourself, analyze what someone is saying online and then ask yourself – does it really make sense? Most of us already do that. We’ve all had that one friend in our life with an absolutely bonkers investment plan – one that is most certainly a scam.SEBI Heat on Fin-Influencers: A Call for Regulation and Responsibility

Credibility Beyond Social Media Presence

The government will do its job with regulation but we as users must also be careful. A good phone camera does not make someone a professional; neither does cool Instagram music or graphics. Credibility still comes from good old sources – education, experience and in this case, official recognition.

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