Sebi has ramped up its efforts to tackle misleading social media accounts targeting investors, removing over 70,000 such accounts in the past six months. This crackdown comes when domestic equity ownership has been steadily increasing.
There is a significant movement of domestic investment towards the capital market, including mutual funds, where over the past five financial years inflows into equity mutual funds have been to the tune of ₹16 lakh crore — 10 times the net inflow of foreign portfolio investors over the same period. At the same time, the number of unique investors under the ambit of the capital market regulator has increased from less than 5 crore in March 2020 to over 13 crore at present.
Speaking at an event organised by the Association of Registered Investment Advisors on Friday, Sebi whole-time member Ananth Narayan G said the regulator is working to ensure greater investor participation alongside responsible and risk-aware investing.
“We also need to collectively minimise type 1 errors (when wrong things happen and endanger trust) and type 2 errors (where regulations come in the way of good business). On type 1 errors, a common worry for all of us is the menace of unregistered IA/ RAs (investment advisors/research analysts) who are cashing on the rising interest in investments. Since October 2024, Sebi has worked with social media companies to bring down over 70,000 misleading handles/posts,” Narayan said.
He encouraged investors to use the UPI pay-right handle to identify registered entities and ensure that payments are only made to Sebi-registered entities.
Narayan emphasised the need for investor protection, awareness, and responsible investing, stressing that “sustained capital formation is our collective goal”. He reiterated the importance of collaboration among all participants — including issuers, investors, regulators, and advisers — to maintain the momentum of capital formation and trust in the financial markets.
Credibility concern
The Sebi whole-time member’s comments become significant when seen in the context of the wide gap between the rising number of financial influencers or ‘finfluencers’ and the number of Sebi registered financial advisers.
A study conducted by the CFA Institute covering a sample of 1615 retail investors and 51 Indian financial influencers shows 82 per cent of investors were influenced by social media and acted on the advice they received.
“Yet only 2 per cent of content creators are Sebi-registered, a statistic that underscores the need for stronger regulatory oversight and informed decision-making,” the report said.
Related party deals
Sebi has extended the deadline for listed entities by three months to July 1 for complying with the industry standards on minimum information to be provided for review by the audit committee and shareholders when seeking approval of a related party transaction. Earlier, the industry standards were set to become effective from April 1, 2025.
