Introduction
In the digital age, financial influencers, or “finfluencers,” have changed the way retail investors interact with the stock market. Using YouTube, Instagram, LinkedIn, and Twitter, these individuals break down complex financial ideas into simple language, making it easier for retail investors to invest. This growing influence is inevitably accompanied by concerns about unregulated investment advice, potential conflicts of interest, and the risk of misleading information.
Therefore, on January 29, 2025, Securities and Exchange Board of India (SEBI) brought about new guidelines under Section 16A of the Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2024, in order to regulate financial influencers by restricting their use of live stock market data in educational content. This move is aimed at curbing misleading financial advice and ensuring that only registered professionals offer investment recommendations. This blog delves into the legal basis, regulatory implications, and broader effects of SEBI’s new rules, exploring their potential consequences for finfluencers and retail investors alike.
Understanding Sebi’s New Regulations on Finfluencers
The SEBI issued circular on January 29, 2025, introduced heavy restrictions upon registered market intermediaries, prohibiting them from collaborating with unregistered financial influencers in an attempt to prevent the circulation of unverified investment tips and safeguard investor interests. The key provisions of this regulation restrict intermediaries from dealing with any organization that provides investment advice without registration with SEBI or makes return or performance claims on securities without approval. These provisions aim to avoid financial promotions being misleading and prevent unregulated individuals from influencing investment decisions in the absence of regulation. By restricting only SEBI-registered participants from giving investment tips, the regulator is attempting to uphold investor protection and market integrity. Additionally, SEBI has taken a step further by prohibiting finfluencers from using real-time stock market data in educational content. According to the circular, financial educators can only use stock prices data with a three-month lag, preventing disguised real-time trading tips. This regulation is expected to curtail illegal advisory services by eliminating unauthorized market predictions
A significant aspect of this circular is its broad definition of “association,” beyond what is given under the explanations of Section 16 A of the 2024 Regulations .SEBI mandates that regulated entities must not engage with unregistered finfluencers in any form, including monetary relationships, referral agreements, marketing partnerships, or digital collaborations. This blanket prohibition eliminates indirect sponsorships and covert endorsements where finfluencers might receive remuneration through middlemen in an investment platform or security promotion market. Apart from this, SEBI is also emphasizing the necessity for regulated parties to deliberately shun any unregistered players advertising their service, not allowing unapproved entities access to their brand names, trading platforms, or financial products. Imposing a three-month delay on market price display, SEBI significantly diminished the appeal of content that quietly peddle trading tips disguising as education. Without the ability to provide near-real-time stock data, the majority of finfluencers will be unable to keep their followers or monetize their content, significantly limiting their visibility among retail investors. Along with this, any voice, video, or screen share that proposes future share performance or investment suggestions is prohibited unless followed by a SEBI license. However, this raises new issues of distinguishing between genuine educational material and those pretending to be financial advice. Although these regulations enhance investor protection, they also create concerns regarding enforcement difficulties, especially monitoring online information and weighing potential conflicts with free speech as well as internet media regulation.
Regulatory Issues within SEBI’s Framework
While SEBI’s regulatory crackdown on finfluencers marks a progressive step, there are a string of legal uncertainties in its requirements that discourage adherence and application.
The most noticeable lacuna is ambiguity of law on the “association” between SEBI-governed organisations and finfluencers.
Though the circular prohibits direct or indirect association, it does not necessarily rule out circumstances such as shared working place for businesses, informative posts, or recommendations through intermediate parties. This leaves with some ambiguity, making it difficult for the intermediaries to assess whether their activity with finfluencers would fall under the purview of SEBI’s prohibitions.
For instance, if a SEBI-approved mutual fund firm collaborates with a finfluencer to generate recall of brand without mentioning any securities, there is no indication that such engagement would amount to contravention of the circular.
The second main enforcement issue arises from the overlap of regulatory jurisdictions between SEBI and other financial regulators. Though SEBI regulates promotion relating to securities, finfluencers push mutual fund products, insurance products, or online lending products overseen by other regulatory bodies such as RBI. The distributed regulatory environment leads to unequal enforcement. Finfluencers can exploit these gaps by routing their promotion through unregulated financial domains. Without coordination among agencies, these gaps in regulation, and finfluencers would continue to influence investor behaviour despite being censured by SEBI.
A further complication is in regulating financial promotions on the internet, where content can so readily cross borders. Most of the finfluencers operate anonymously or through overseas accounts, which renders it challenging for SEBI to force compliance. Use of vague promotionary phrases, such as describing one’s personal investments without express advice, is also making tracing more complicated.
Financial exchanges between intermediaries and finfluencers—through affiliate marketing, referrals, or hidden sponsorships—are difficult to monitor.ns. SEBI’s current reliance on self-regulation by intermediaries may be insufficient, as identifying indirect associations on digital platforms requires advanced digital forensic capabilities and broader regulatory cooperation. A further complication arises from s.
Lack of an open and impartial process for redressal against finfluencers who are alleged to have violated rules is another essential loophole.
Broader Implications of SEBI’s Crackdown
The implementation of SEBI’s 2025 circular is likely to have far-reaching implications on the financial landscape in India. While the primary objective of the regulation is to protect retail investors from misleading financial advice, the ripple effects extend to the structuring of the financial advisory ecosystem, content moderation on social media platforms, and overall market transparency.
A significant positive impact of SEBI’s crackdown is the potential creation of a safer investment ecosystem, particularly for retail investors who rely heavily on social media for financial information. By limiting the spread of unverified and unchecked financial advice, the circular will not only limit the extent of possible financial losses among retail investors but also encourage improved and impartial investment decision-making. Another significant effect is the likely rise in monitoring of social media financial content, particularly on platforms such as Instagram, YouTube, Twitter, and other content-based websites. Social media platforms today function on minimal financial content regulation, providing finfluencers with the opportunities to promote finance products with nominal or no content regulation. The circular issued by SEBI today indirectly holds platforms accountable by deterring SEBI-registered intermediaries from colluding with non-regulated content creators.
With SEBI effectively eliminating the scope for unregistered financial promotions, many popular finfluencers may now choose to formalize their advisory services by registering under SEBI’s licensing framework. This shift can lead to a more organized and accountable financial advisory ecosystem, wherein individuals providing financial guidance are held to the same ethical and professional standards as traditional market intermediaries. However, this shift may also lead to a potential decline in financial content creators, as many influencers may choose to exit the space entirely rather than comply with SEBI’s formal registration process. This creates a potential trade-off between ensuring compliance and limiting financial literacy outreach, which SEBI may need to address through progressive policy adjustments in the future.
The Way Forward: Legal Reforms & Policy Recommendations
While SEBI’s regulatory crackdown sets a strong precedent for investor protection, it is not without its legal and operational gaps.
The first area of reforms is to give more definite definitions of “association” under the SEBI regime. The present circular prohibits direct or indirect association between finfluencers and SEBI-registered parties but is silent on specific guidelines about how to identify permissible interaction and banned collaboration. SEBI may clarify this ambiguity by particularly outlining the kinds of association that would violate compliance like direct paid collaborations, sponsorships of content, and profit-sharing partnerships but excluding objective education content, general market analysis. Giving regulatory thresholds defined very clearly would remove the added friction between participants in the markets and content writers and still achieve a balance and openly clear content eco-system.
Second, the existing self-regulatory model puts intermediaries in the market in charge of compliance but is lacking when it comes to content produced by cross-border finfluencers, affiliate links in plain sight, or algorithm-based content sharing. Implementing AI-powered monitoring systems with the capacity to identify coded ads, undisclosed networks, and cross-border promotions would greatly enhance enforcement efficiency. Furthermore, SEBI can invoke the help of the social media platforms to implement compulsory content labelling of financial advice so that it is separable from paid solicitations, investment counsel, and educational content.
Lastly, SEBI should take into account the absence of a proper process for appealing against a charge of regulatory misconduct levied against a finfluencer. Whereas the current regimen of regulation hinges so much on punishment of middlemen in the market, there is no discernible avenue of appeal through which finfluencers can contest allegations and present their defence. Establishing a structured dispute resolution framework would allow finfluencers to contest SEBI’s decisions, ensuring that enforcement remains proportionate, transparent, and non-arbitrary.
This blog is written by Vidhi Sharma, Hidayatullah National Law University.