“We’re working on the guidelines for financial influencers,” Sebi full-time member SK Mohanty said on the sidelines of a CII conference on “Corporate Fraud: Corporate Governance and Risk Management.” Sebi’s move follows a sharp rise in the number of various “unregistered” investment advisors providing unsolicited social media stock picks on various social media platforms. There have also been reports that certain companies are using social media platforms to boost their stock prices through such influencers. Finfluencers are people with public social media platforms who offer advice and share personal experiences about money and investing in stocks. Their videos cover budgeting, investing, real estate buying, cryptocurrency advice and financial trend tracking.

According to Mohanty, fraud cases are neutral and can take place in any company, whether it is publicly traded or not, especially after incidents of digital data theft and technological risk. He expressed concern at the eroding confidence of retail investors amid a growing investor base in capital markets.

He said corporate fraud rates are increasing at a rapid rate. Explaining that the Sebi has constantly improved surveillance and technology, he said the diversion of funds/assets not only leads to the erosion of shareholders’ wealth, creates anarchy and financial crises, but also leads to ethical crises and reputational risks.

Some of these influencers have thousands of followers, with their investment advice being followed closely by millions of people across the country. They post videos in English, Hindi, and a mix of English and Hindi. Worryingly, scammers are using this avenue to manipulate stock prices. “I saw an online portal article claiming that finfluencers are being paid Rs 7 to 9 lakh per referral to push financial products on social media. All investors, please do your own due diligence and check the credentials of the financial influencers providing the advice,” one fund manager tweeted.