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Finfluencers

  • 19 Nov 2022
  • 3 min read

Why in News?

The Securities and Exchange Board of India (SEBI) is working on guidelines for financial influencers — popularly known as ‘finfluencers’.

  • Finfluencers are people with public social media platforms offering advice and sharing personal experiences about money and investment in stocks.
    • Their videos cover budgeting, investing, property buying, cryptocurrency advice and financial trend tracking.

What is the Need of the Regulations?

  • The number of 'unregistered' investment advisors giving unsolicited 'stock' tips on social media platforms has increased dramatically.
  • In addition, certain companies used social media platforms to boost their share prices through finfluencers.
  • There is no difference between listed companies and non-listed companies when it comes to fraud, more so now that digital data thefts and technological risks are on the rise.
    • Diversion of funds/ assets not only leads to erosion of wealth for shareholders, creates anarchy and financial crisis but also leads to ethical crisis and reputational risk.

What is SEBI?

  • About:
    • SEBI is a statutory body established in 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992.
    • The basic functions of the Securities and Exchange Board of India is to protect the interests of investors in securities and to promote and regulate the securities market.
    • It’s headquartered is in Mumbai, India.
  • Structure:
    • SEBI Board shall consist of the following members, namely: -
      • Chairman
      • Two members from amongst the officials of the Ministry of the Central Government dealing with Finance
      • One member from amongst the officials of the Reserve Bank of India
      • Five other members of whom at least three shall be the whole-time members to be appointed by the central Government.
    • SEBI also appoints various committees, whenever required to look into the pressing issues of that time.
    • Further, a Securities Appellate Tribunal (SAT) has been constituted to protect the interest of entities that feel aggrieved by SEBI’s decision.
    • SAT consists of a Presiding Officer and two other Members.
    • It has the same powers as vested in a civil court. Further, if any person feels aggrieved by SAT’s decision or order can appeal to the Supreme Court.

Source: IE

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