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Sebi sets rules to differentiate educators from financial influencers

Move to curb finfluencers doling out stock tips in the guise of educational content

Sebi

Securities and Exchange Board of India (Sebi)

Khushboo Tiwari Mumbai

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The Securities and Exchange Board of India (Sebi) has drawn distinct lines differentiating educators and financial influencers (finfluencers), with its latest clarifications on sharing of live trading data.
 
Along with restrictions on associating with unregistered entities, the market regulator has clarified that educators should not be using the market price data of the preceding three months to discuss the name of any securities, including code names.
 
“Such person (educator) 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,” notes the clarification issued by Sebi.
 
 
The market regulator has reiterated that providing advice or any recommendation on markets by unregistered entities is prohibited. Further, making any claim of returns or performance without being permitted to do so by the regulator is also prohibited.
 
Through the clarification issued on Wednesday, Sebi has detailed situations where an individual, who may be an educator, could land in regulatory crosshairs.
 
While association with educators is not restricted, the regulated entities must ensure that the one providing investor education is not engaged in the prohibited activities.
 
In the last one year, Sebi has issued warning letters to over 36 entities and individuals for acting as unregistered investment advisers. These include individuals running telegram and other social media channels with stock recommendations and those collecting fee for advising even though they are not registered as advisors.
 
Through earlier circulars, Sebi had restricted association of its regulated entities with unregistered players, including any monetary transaction, referral of a client, or interaction of IT systems.
 
Regulated entities such as stock brokers and asset management companies (AMCs) have been directed to ensure that their agents do not indulge in any of the prohibited activities.
 
“If a broker associates with a person (who is promoting insurance products) engaged in any of the two prohibited activities, it would be violation of the Sebi regulations since the Intermediaries Regulations prohibit any association, directly or indirectly, with another person engaged in any of the two prohibited activity,” notes Sebi’s clarification circular.
   
Sebi imposes Rs 7 lakh penalty on Motilal Oswal Financial Services
 
The Securities and Exchange Board of India (Sebi) has imposed a penalty of Rs 7 lakh on Motilal Oswal Financial Services (MOFSL) for alleged violations of securities laws. The market regulator has alleged lapses in margin trading funding, reporting and short collection of margin, grievance redressal, uploading of weekly data of cash and cash equivalent balance, and maintenance of bank books. Sebi had conducted searches on the stockbroker between April 2021 and June 2022. 
Anand Rathi Shares and Stockbrokers fined Rs 6 lakh by Sebi
 
The Securities and Exchange Board of India (Sebi) has imposed a penalty of Rs 6 lakh on Anand Rathi Share & Stockbrokers for alleged lapses. The market regulator conducted an inspection between April 2020 and October 2021 and sent a show-cause notice to the stockbroker in October 2023. Sebi has alleged misutilisation of funds, non-maintenance of the daily reconciliation statement, incorrect reporting of margin collection, ledger balance mismatch in the daily margin statement, among others.
   

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First Published: Jan 30 2025 | 6:27 PM IST

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