Sebi has repeatedly warned investors about the dangers of acting on dubious advice on social media, and has taken action against at least 29 unregistered entities for giving recommendations
India’s legion of financial influencers are once again under the spotlight as the country’s market regulator ramps up action against unregistered advisors dishing out investment tips on social media.
The Securities and Exchange Board of India last week barred Mohammad Nasiruddin Ansari and two other entities linked to him from the market and ordered them to refund Rs 17.2 crore ($2.1 million) taken from followers. Ansari’s YouTube channel has close to half-a-million subscribers. His web portal provided investment advice under the guise of offering educational training, Sebi said.
The regulator’s order is at least the third high-profile crackdown on a financial influencer this year. While retail trading boom during the Covid era has cooled in many parts of the world, the lasting rally in Indian equities since the depths of the pandemic has seen young investors turn to social media in droves for stock tips.
That’s led to a proliferation of influencers such as Ansari offering lessons on investing.
“You may see more actions coming from the regulator in appropriate cases as Sebi is watching over finfluencers and their conduct,” Manendra Singh, partner at Mumbai-based Economic Laws Practice said over phone. “The tussle between the influencer ecosystem and regulator will continue.”
India’s NSE Nifty 50 Index has surged almost 130 per cent in dollar terms since global equities bottomed in March 2020. That’s about double the advance in the MSCI All Country World Index. Gauges of Indian small- and mid-cap shares have rallied even more, fueling an explosive growth in the number of trading accounts.
Sebi has repeatedly warned investors about the dangers of acting on dubious advice on social media, and has taken action against at least 29 unregistered entities for giving recommendations. These include a crackdown against a popular influencer and options trader P R Sundar, who settled the charges with a fine of Rs 47 lakh, and curbs on Profit Guru and its founder Satish Shukla.
In Ansari’s case, Sebi said that he was inducing clients by assuring returns of as much as Rs 600,000 a month, while also guiding those who paid him for advice on real-time trades. His YouTube channel also streamed certain videos that promised quick returns via trading, the regulator said.