SEBI Vs. Finfluencers: A Regulatory Approach To Investor Protection
- IJLLR Journal
- May 28
- 2 min read
Arbind Singh, West Bengal National University of Juridical Sciences (NUJS)
Aayush Pawar, West Bengal National University of Juridical Sciences (NUJS)
ABSTRACT
For the last thirty years, the Indian Capital markets have been growing fast both in terms of size and the way they are regulated. As the global financial landscape continues to change, markets also become increasingly complex, hence making it imperative for regulators and policymakers to stay a step ahead. SEBI has slowly expanded its power over the years and cemented its internal mechanisms to provide better protection to investors. Yet, inherent risks remain, which leave the investors vulnerable to financial risks.
One such growing concern is the rise of financial influencers, or finfluencers, who dispense investment advice on social media. Some of them do truly aim to create financial acumen but many possess no qualification certificate nor are they regulated at all. This puts forward seriously dangerous offerings, misrepresentation of financial products or strategies which are not supported by genuine expertise. The result is, there exists limited monitoring in that space, thereby placing a grave need for greater regulatory action, to stop the spread of unreliable financial guidance.
This paper delves into the challenges posed by finfluencers like misleading investment tips, pump and dump activities, and market manipulation for personal profits" while also criticising the gaps in the current regulatory framework which are not able to effectively tackle these challenges and protect investors from misinformation in the digital era. By looking to other countries for regulatory models, this paper proposes a more structured approach entailing basic transparency and disclosure standards for finfluencers.
To address these challenges, the paper puts a strong emphasis on the necessity of independent self-regulatory bodies, stronger partnerships between market regulators and social media platforms, and more important cooperation with other relevant authorities. These actions would make sure that finfluencers provide accurate and responsible financial content, thereby diminishing risks for investors. At its essence, this paper outlines that a proactive regulatory approach is needed to protect the integrity of the market and investors from thereby misleading financial advice. With the institution of an explicitly articulated and comprehensive regulatory framework, the regulators could actively encourage finfluencers to play a constructive role in the improvement of financial literacy while ensuring transparency and accountability in the investment space.
