What's the news: The Securities and Exchange Board of India (SEBI) is formulating guidelines for financial influencers or "finfluencers" to curb unsolicited financial advice on social media, especially stock tips, Business Standard reported on November 18. Why does this matter: Improper and misleading financial advice puts consumers at risk, and this is exacerbated by the speed and scale at which social media platforms like Twitter, WhatsApp, Instagram, and Youtube amplify messages. Recently, there have also been allegations that influencers are being roped in to manipulate the share prices of certain companies. While there are guidelines by the Advertising Standard Council of India (ASCI) and SEBI itself has previously issued advisories, a formal set of guidelines goes further in addressing misconduct by unregistered financial advisors. Notably, SEBI's announcement comes on the heels of the sudden collapse of the crypto exchange FTX, which was peddled by numerous celebrities and influencers but has now resulted in customers losing billions of dollars. Cannot give advice without SEBI registration: According to Business Standard, influencers will be liable for action for giving financial advice without being registered with SEBI even if there is a lack of a contract with the consumer and even if the influencer gives a disclaimer about not being registered with the market regulator. "In lack of proper framework and regulations, finfluencers continue to give advice claiming it to be under the sphere of financial literacy. Finfluencers are of the opinion that as they do not charge any fee from people on social media and nor do they enter in any contract…
