In a move that could curb financial influencers peddling stock tips wrapped as education on social media and other platforms, Securities and Exchange Board of India (SEBI) has barred use of the latest share price data even for educational purposes.
Under the new directive, a person engaged solely in education “should not be using the market price data of the preceding three months to speak/talk/display the name of any security, including using any code name of the security in his/her talk/speech, video, ticker, screen share etc. indicating the future price, advice or recommendation related to security or securities,” the regulator said.
This follows several attempts by the market regulator to rein in unregistered investment advisors — many of whom have been misleading retail investors by giving out stock recommendations and tips disguised as educational content on various social media platforms.
Time lag
The regulator has already barred SEBI-registered entities or market intermediaries from associating with unregistered finfluencers as well as prohibited intermediaries from sharing real-time stock price data with third parties, except with a day’s lag for investor education. However, several finfluencers found ways around this restriction, including sharing their live trading screen or other tactics to provide real-time stock tips.
Now, with a three-month lag on stock price data, SEBI aims to disrupt the business models of popular finfluencers who rely on real-time data to shape market sentiment and attract followers, training programme participants and paid partnerships.
While this move severely restricts finfluencers and certainly narrows the avenues for unregulated financial content, this may not spell the end of unregulated financial advice, warn experts, as finfluencers might find other ways to circumvent regulations.
Expert view
“Some unregistered advisors might pivot towards indirect analysis, delayed market commentary, or alternative platforms. However, SEBI’s intent is clear — any remaining gaps will likely be addressed soon,” said CS Anupriya Saxena, Partner at JMJA & Associates LLP.
Suhana Islam Murshedd, Partner at AQUILAW said, “This new directive not only tightens regulatory oversight, but also underscores the necessity of providing genuine education rather than quick tips that can mislead investors. By enforcing a lag in price data, SEBI encourages educators to concentrate on teaching fundamental principles and long-term strategies rather than short-term speculation that could harm investor decisions and manipulate the market.”
The new rule may pose challenges for finfluencers and also force them to focus more on long-term investment strategies and fundamental analysis, rather than short-term trading tips, said Rahul Sundaram, Partner at IndiaLaw LLP.
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