Finfluencers

• 19 Nov 2022

Why in News?

The Securities and Exchange Board of India (SEBI) is working on guidelines for financial influencers — popularly known as ‘finfluencers’.

• Finfluencers are people with public social media platforms offering advice and sharing personal experiences about money and investment in stocks.
  • Their videos cover budgeting, investing, property buying, cryptocurrency advice and financial trend tracking.

What is the Need of the Regulations?

• The number of 'unregistered' investment advisors giving unsolicited 'stock' tips on social media platforms has increased dramatically.
• In addition, certain companies used social media platforms to boost their share prices through finfluencers.
• There is no difference between listed companies and non-listed companies when it comes to fraud, more so now that digital data thefts and technological risks are on the rise.
  • Diversion of funds/ assets not only leads to erosion of wealth for shareholders, creates anarchy and financial crisis but also leads to ethical crisis and reputational risk.

What is SEBI?

• About:
  • SEBI is a statutory body established in 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992.
  • The basic functions of the Securities and Exchange Board of India is to protect the interests of investors in securities and to promote and regulate the securities market.
  • It’s headquartered is in Mumbai, India.
• Structure:
  • SEBI Board shall consist of the following members, namely: -
    • Chairman
    • Two members from amongst the officials of the Ministry of the Central Government dealing with Finance
    • One member from amongst the officials of the Reserve Bank of India
    • Five other members of whom at least three shall be the whole-time members to be appointed by the central Government.
  • SEBI also appoints various committees, whenever required to look into the pressing issues of that time.
  • Further, a Securities Appellate Tribunal (SAT) has been constituted to protect the interest of entities that feel aggrieved by SEBI’s decision.
  • SAT consists of a Presiding Officer and two other Members.
  • It has the same powers as vested in a civil court. Further, if any person feels aggrieved by SAT’s decision or order can appeal to the Supreme Court.

Source: IE