Key Takeaways:
- India’s SEBI recently fined a self-proclaimed financial influencer.
- The regulatory body has made it difficult to become a Fin-influencer.
- Influencers refused to comment on SEBI’s stance.
NEW DELHI (CoinChapter.com) — The Securities and Exchange Board of India has decided to go after social media influencers who give financial advice, or ‘Finfluencers,’ for operating without having the proper knowledge or experience.
In a landmark decision, the regulatory watchdog recently banned finfluencer and educator Mohammad Nasiruddin Ansari, who operated under the handle ‘Baap of Chart,’ along with two others from the securities market.
The regulatory body noted that Ansari lured novice investors through his social media accounts on X, YouTube, etc., and asked them to enroll in courses on the ‘Baap of Chart‘ application.
Once the investors purchased a course, they were invited to a private chat group that gave recommendations to buy or sell. SEBI alleged that Ansari and his associate Rahul Rao Padamati and Golden Syndicate Ventures provided stock recommendations but marketed it as a market-related educational program.
Furthermore, the Indian market regulator passed an interim order directing Ansari to refund $2.1 million (INR 172 million) collected from his followers. Moreover, SEBI noted that Ansari’s disclaimer of ‘providing information for educational purposes only‘ did not absolve him of wrongdoing.
Interestingly, Ansari promised clients at least $3,600 (INR 300,000) in profits if they followed his advice. Moreover, the finfluencer claimed to book profits to the tune of 20%-30% regularly. In reality, Ansari incurred a net loss of nearly $360,430 (INR 30 million) between Jan. 2021 and July 2023.
SEBI Proposed Regulating Finfluencers In August
The Advertising Standards Council of India (ASCI) made it mandatory for finfluencers to register with SEBI and disclose their credentials. The move was part of ASCI’s revised advertising guidelines.
Later, SEBI proposed that influencers who wished to peddle financial advice must register as Investment Advisors or Research Analysts.
SEBI released guidelines for registered intermediaries and finfluencers. The regulatory watchdog prohibited any association with unregistered entities for promotion, along with payment of referral-based trailing fees.
Furthermore, SEBI stated that registered intermediaries must dissociate themselves from any unregistered entity using the registered intermediary’s name or product. SEBI took this step to limit instances of registered entities renting out their licenses.
For finfluencers, SEBI made it compulsory to provide contact details for grievance redressals. The markets watchdog also clearly defined the difference in the roles and responsibilities of Investment Advisors (IA) and Research Analysts (RA).
IA and RA are the two certifications that finfluencers need to have before peddling financial advice.
Finfluencers Remain Tightlipped
CoinChapter reached out to several finfluencers across several platforms in order to get their views on SEBI’s action against the creator community.
The finfluencers that CoinChapter reached out to include Raj Shamani, Sharan Hegde, Neha Nagar, etc., content creators who many consider the top finfluencers of the country. None of the finfluencers we approached had displayed their SEBI certification numbers anywhere on their social media platforms.
CoinChapter also reached out to legal influencer Ashish Dawar for his views on SEBI’s decision. Dawar stated that he would make a video on the subject, but did not comment on any of CoinChapter’s questions.
Only one Indian crypto influencer, Crypto Hanuman, answered CoinChapter’s questions. Hanuman noted that crypto influencers fall outside the purview of SEBI, hence the regulatory watchdog’s stance might not affect the earnings of crypto influencers.
Additionally, the crypto influencer stated that SEBI was justified in its decision, alleging that many finfluencers lost money trading but still made millions by selling trading courses, similar to Ansari.
