SEBI delivers deathblow to finfluencers, stops running unregistered advisories under garb of education

According to the latest circular, registered entities cannot associate with finfluencers in violation of this code--by advertising on their channels or in various other ways that involve monetary or non-monetary compensation.

The market regulator has delivered a deathblow to finfluencers.

It has clarified that people who provide stock-market education will need to do with stock-prices with a three-month lag. That is, they cannot use live market prices anymore.

This signals the end for various finfluencers who run unregistered investment advisories under the garb of stock-market education.

In late hours of January 29, the Securities and Exchange Board of India (SEBI) issued a circular clarifying provisions related to regulated entities with persons engaged in prohibited activities.

While SEBI had restricted the association of registered and unregistered entities through a circular issued on October 22, 2024, the latest circular will put an end to the final lucrative and questionable business such associations have spawned, which is illegal advisories masquerading as stock market education.

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In the latest circular, SEBI has clarified that people providing stock market education will need to do so with stock-prices with a three-month lag.

Without showing people how to trade in the live market, and thus giving stock tips and trading calls, finfluencers are likely to quickly lose their subscribers and students.

According to the latest circular, registered entities cannot associate with finfluencers in violation of this code--by advertising on their channels or in various other ways that involve monetary or non-monetary compensation.

The circular says that investor education is not prohibited. But it must be ensured by the persons regulated by the Board that such educators should not provide investment advice without SEBI registration or make performance claims without permission to so from SEBI.

It says, "A person engaged solely in education shall mean that such person is not engaged in any of the two prohibited activities. Such person 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. "