SEBI Approves Norms To Regulate 'Finfluencers' Amid Rising Concerns

In a recent board meeting, SEBI approved a set of norms for curbing the influence of unregistered finfluencers. The regulator stated that it is important to ensure that all financial advice and recommendations provided to investors are within a regulated framework to protect investor interests and maintain market integrity.

The newly approved norms prohibit entities regulated by SEBI, such as brokers and their agents, from associating with unregistered finfluencers. This includes prohibiting any form of monetary transactions, client referrals, or interaction with information technology systems between regulated entities and unregistered finfluencers.

SEBI also stated that regulated entities and their agents must ensure that any person they associate with does not engage in prohibited activities, such as offering financial advice or making performance claims without SEBI's permission.

The restrictions outlined by SEBI will not apply to individuals or entities exclusively engaged in investor education, provided they do not offer direct or indirect financial advice, recommendations, or performance claims. Additionally, specified digital platforms with mechanisms to prevent the misuse of their services for unregulated financial advice are also exempt from these restrictions.

Changes to Delisting Frameworks

In addition to the new norms for finfluencers, SEBI has also introduced changes to the delisting frameworks to promote ease of doing business and protect investor interests.

SEBI approved the introduction of a Fixed Price process as an alternative to the Reverse Book Building (RBB) process for the delisting of companies whose shares are frequently traded. This process requires that the fixed price offered by an acquirer be at least 15% above the floor price determined under the Delisting Regulations.

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