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Five talking points: SEBI’s action against financial influencer Sundar

Despite repeated actions by SEBI, social media, especially messaging apps remain a fertile ground for financial misinformation

Last week, India's Securities and Exchange Board of India (SEBI) went after financial influencer PR Sundar for providing investment advice without obtaining the necessary registrations from SEBI. The regulator imposed a penalty of over ₹6 crores and banned Sundar from trading in the stock market for a year. What does it mean for other finfluencers? SEBI's crackdown on Sundar is a message to other financial influencers (or finfluencers) who provide investment advice without the necessary qualifications. Some of these "self-styled financial gurus have deleted content from their social media channels, pages, and Telegram groups," The Signal reported yesterday. But similar actions by SEBI in the past have not had a lasting or significant impact on the industry. So it's unclear how much of a deterrent this order will be. Is SEBI acting too late? PR Sundar has been giving financial advice through his website since 2013. SEBI began investigating him in 2021 and took about two years to deliver this order. This excessive time taken to crack down on misleading advice is problematic for two reasons: 1) the advice peddled might have already caused irreversible harm to citizens, and 2) it is unsustainable to do this for every erring financial influencer, given how fast the industry is growing. What's the status of SEBI guidelines? In November 2022, there were reports that SEBI is formulating guidelines for finfluencers to curb unsolicited financial advice on social media. These guidelines would have provided a set of dos and don'ts for finfluencers and could have made it…

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