Social Media, Finfluencers And Investor Protection: Emerging Challenges Under Indian Securities Law
Saif Rahman, CB&IL LLM, Amity Law School, Amity University, Noida
ABSTRACT
The rapid expansion of social media has transformed how retail investors obtain, evaluate and act upon information concerning securities. Financial influencers, commonly known as “finfluencers,” have become significant actors in this digital information ecosystem. Through YouTube, Instagram, Telegram, podcasts and other platforms, they simplify complex financial information and influence investment decisions. While such communication can enhance financial awareness and market participation, it may also facilitate misleading recommendations, undisclosed commercial relationships, conflicts of interest, market manipulation and fraudulent schemes. The regulatory concern becomes particularly significant when individuals provide investment advice or research without registration with the Securities and Exchange Board of India. This paper critically examines the relationship between social media, finfluencers and investor protection under Indian securities law. It analyses SEBI’s statutory powers, the prohibition of fraudulent and unfair trade practices, the regulatory framework governing investment advisers and research analysts, the 2024 restrictions concerning associations between regulated entities and persons engaged in prohibited activities, and SEBI’s evolving approach to financial communications on social media. It further examines challenges relating to attribution, evidence collection, algorithmic amplification, sponsored content, anonymous accounts and cross-platform dissemination. The paper argues that existing securities laws can address harmful digital conduct, but effective enforcement requires technologically responsive mechanisms. It concludes that India should adopt a calibrated regulatory framework combining disclosure requirements, registration-based regulation, platform cooperation, digital surveillance, rapid investor warnings and enhanced financial literacy. Such regulation must distinguish genuine financial education from actionable investment advice while preventing the absence of a formal adviser-client relationship from becoming a shield for deliberate deception.
Keywords: social media; Finfluencers; SEBI; Securities law; Market manipulation; Financial literacy; Digital platforms; Retail investors.
