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regular-article-logo Wednesday, 26 February 2025

Sebi heat on financial influencers, bans live stock prices for investment advice

In October last year, the market regulator had said that ‘persons’ regulated by it should terminate their contract or association with any person who is engaged in any of the two activities that is not permitted by the board

Our Special Correspondent Published 31.01.25, 11:06 AM
Representational image

Representational image File image

The Securities and Exchange Board of India (Sebi) has dealt a big blow to financial influencers or finfluencers when it said that stock market educators can only use stock prices with a three-month lag.

This would mean that they cannot use the live-feed and provide unregistered investment advice in the name of stock market education.

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“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 indicating the future price, advice or recommendation related to security or securities,” a circular issued by the market regulator said.

Sebi added that these rules have come into force with effect from August 2024.

In October last year, the market regulator had said that ‘persons’ regulated by it should terminate their contract or association with any person who is engaged in any of the two activities that is not permitted by the board.

These two prohibited activities included “providing advice or any recommendation, directly or indirectly, in respect of or related to a security or securities, without being registered with or otherwise permitted by the Board to provide such advice or recommendation’’.

The other activity was “making any claim, of returns or performance expressly or impliedly, in respect of or related to a security or securities, without being permitted by the Board to make such a claim’’.

The ‘persons’ regulated by Sebi include mutual funds, investment manager of an alternative investment fund or infrastructure investment trust and brokers among others. Therefore, they cannot directly or indirectly be associated with unregistered influencers. It would also apply to mutual fund distributors and portfolio managers.

“It is the responsibility of the persons regulated by the Board to ensure that any person associated with them or their agent, directly or indirectly, does not engage in any of the above mentioned two prohibited activities, directly or indirectly,’’ Sebi added.

Sebi also warned that if the regulated entity violates the rules, it could face potential actions like penalty, suspension or cancellation of registration, and debarment.

Recently, the regulator had restrained seven entities, including Mohd Nasiruddin Ansari, who ran unauthorised investment advisory services in the name of ‘Baap of Chart’, for up to one year.

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