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Kolkata: Social media have come to shape and influence much of our thoughts, and unfortunately, even the investment decision of most of us are not immune from what we get to see or hear on social media platforms. This year, the CFA (Chartered Financial Analyst) Institute came up with a report that dwelt on the risk, misinformation and hidden agendas which typified the growing influencer community in India.
The report filed in March stated 82% of investors were influenced and took investment decisions on tips from finfluencers. But the real danger was that only a miniscule 2% of the influencers were/are registered with Sebi. The overwhelming 98% of finfluencers who are not approved by the markets regulator triggered grave concerns about the investment culture in the country which is rising rapidly but was hobbled by such incapable advice.
The appeal of finfluencers lie in the fact that they present investment as an alluring way to make quick profits, almost turning it into a magic wand to rake in windfall gains, which goes against the science of investing. In December, Sebi urged regulated entities not to engage with unregistered investment advisors on social media. Sebi also asked various entities to end any contract that might have struck with such unregistered advisers by January 2025.
Not content with issuing advisories and directives, Sebi is about to engage with You Tube, Meta and Telegram directly. According to reports, the market regulator will urge them to stop sharing content of these unregistered advisors dishing out investment advice. Sebi intends to tell the platforms that these finfluencers pose serious threat to the interest of the common people and the popular platforms should not associate with them at all. Reports indicate that these platforms are also working towards taking the content from unregistered influencers down.
The tough stance of Sebi seem to be already bearing fruit. Reports state that Meta has asked advertisers to verify securities and investment-related advertisements on all its platforms from July 31. Meta owns three of the most popular social media platforms Facebook, Instagram and WhatsApp. This decision was announced on June 26.
