The Reserve Bank of India (RBI) will not regulate social media influencers in the financial market and has no plans to separately introduce specific rules governing their activities. RBI governor has made it clear that RBI will not rein on social media influencers. Because measures have already been taken by SEBI to resolve this issue.
SEBI, the sector watchdog, is actively considering directions to restrict the influence of finance influencers such as brokers and mutual funds to combat the spread of financial advice disseminated through social media platforms.
SEBI has expressed its intention to implement the rules from January 2022, thus far no official guidelines have been issued. Yet the organization is taking action against individuals involved in manipulative practices. Identification of market abuse through Telegram stock recommendation in January 2022, clampdown on YouTubers in March 2023 and fine on PR Sundar in May 2023 for alleged violation of investment advisor norms.
Case settled by paying a fine of Rs 6.5 crore
PR Sundar, a prominent YouTuber and businessman, has settled the matter by paying a fine of Rs 6.5 crore and accepting a one-year ban from the market. This historical action of SEBI is the first action against any financial influencer. SEBI's investigation revealed that Sundar operated a website www.prsundar.blogspot.com where he offered advisor service packages. Payment for these services was collected through a payment gateway linked to the bank account of Manson Consultancy, of which Sundar is a co-promoter.
SEBI found in the investigation that the company is engaged in securities activities without a registered investment advisor business, which violates the norms. To settle the matter, Sundar, Manson Consultancy, and co-promoter Mangayarkarsi Sundar have agreed to pay Rs 46.80 lakh and forfeit Rs 6 crore representing profit earned from advisory services and related interest.
Warned about the dangers posed by Ponzi apps
Recently, Finance Minister Nirmala Sitharaman also addressed the concerns related to financial influencers and warned about the dangers posed by Ponzi apps offering financial solutions. The Advertising Standards Council has set guidelines for influencers who may influence buying and investment decisions. In March 2022, the Australia Securities and Investments Commission called for social media influencers to be licensed to provide financial advice, with violators facing jail terms and stiff fines.
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