SEBI’s New Rules Shake Up Finfluencers: What You Need to Know!

The Securities and Exchange Board of India (SEBI) has recently issued a draft circular that could significantly impact the role of financial influencers, better known as finfluencers, in the market. This move comes as SEBI aims to enhance transparency and investor awareness in the context of initial public offerings (IPOs).

Finfluencers Under Scrutiny: SEBI’s Draft Circular

SEBI’s draft circular, dated March 19, calls for companies planning to launch a public issue to include audiovisual (AV) presentations of disclosures made in their offer documents. This requirement aims to ensure that investors have access to comprehensive information before making investment decisions.

Impact on Financial Influencers: Challenges and Changes

The proposed guidelines directly affect finfluencers, who often create content related to IPOs on social media platforms. With concerns raised by SEBI regarding the impartiality of such content, the draft circular emphasizes the need for transparency and accountability in financial communication.

Guidelines for AV Presentations: What You Need to Know

According to the draft circular, AV presentations accompanying IPOs must begin with a disclaimer urging investors not to rely on content provided by fiinfluencers. The responsibility for the content lies with the lead manager(s) of the issue, ensuring accuracy and compliance with regulations.

Ensuring Compliance and Clarity: SEBI’s Stance

SEBI emphasizes the importance of factual, non-promotional content in AV presentations. The duration of these presentations is limited to 8 minutes, with a focus on key disclosures related to the public issue.

SEBI’s move to regulate financial influencers follows previous actions, including proposed restrictions on associations between regulated entities and influencers. Recent cases involving financial influencers highlight the need for greater scrutiny and accountability in this space.

SEBI’s Plans for Regulation: Looking Ahead

SEBI Chairperson Madhabi Puri Buch has outlined plans for enhanced regulation of financial influencers. The proposed establishment of a Performance Validation Agency (PVA) aims to verify performance claims made by market participants, ensuring integrity and reliability in financial communications.

As SEBI continues to refine its regulations, financial influencers and market participants must adapt to evolving guidelines. The proposed measures aim to foster transparency and trust in India’s financial ecosystem, ultimately benefiting investors and stakeholders alike.