SEBI prohibits use of unregulated influencers in financial marketing

The Securities and Exchange Board of India (SEBI) has mandated that brokers and mutual funds cease using unregulated financial influencers for marketing and advertising. This move aims to address issues where unregulated individuals or entities were persuading investors to engage in securities trading based on misleading claims, SEBI stated after a board meeting.

Entities regulated by SEBI and their agents are now prohibited from associating, either directly or indirectly, with anyone providing advice or recommendations on securities. This ban extends to any financial transactions, client referrals, information technology interactions, or other associations with unregulated individuals.

Exceptions to these restrictions include individuals regulated by SEBI who are solely involved in investor education without providing advice, recommendations, or performance claims. Additionally, specified digital platforms that have measures to prevent and address misuse for unauthorized advice or recommendations are also exempt.

The new rules require SEBI-regulated persons to ensure that their associates do not engage in these prohibited activities.