The Securities and Exchange Board of India (SEBI) has issued restrictions for finfluencers providing stock tips on social media platforms as investor education.
The stock prices to be used in investor education have to be three months old; that is, live prices cannot be used.
Additionally, the registered entities are not allowed to pay influencers for direct or indirect 'association'. These regulations have been in force since August 29, 2024.
"It is the responsibility of the persons regulated by SEBI to ensure that any person associated with them or their agent, directly or indirectly, does not engage in any of the abovementioned two prohibited activities, directly or indirectly," SEBI said.
--Giving any recommendation or advice on specific stocks either directly or indirectly without the permission of the market regulator.
--Making claims of returns or performance expressly or impliedly on any security without the permission of SEBI.
SEBI's restrictions will apply to advertisements, branding and promotional material sourced through third-party marketing agencies as well.
"Persons regulated by the board and their agents have been advised through a circular dated October 22, 2024 to terminate their existing contracts, if any, with persons engaged in any of the above-mentioned two prohibited activities, directly or indirectly, within three months from the date of issuance of that circular."
Any entity that's registered with SEBI violating the circular could face a penalty and/or get its licence suspended or cancelled based on an enquiry.
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