SEBI targets "finfluencer" misconduct to protect retail investors, freezes accounts of perpetrators
Mumbai, May 22
Securities and Exchange Board of India on Friday issued a landmark interim order banning multiple unregistered "finfluencers" and entities from the stock market for running a "pump-and-dump" manipulation racket on social media.
According to the SEBI order, the operators bought small/mid-cap stocks, artificially inflated prices by sharing unsubstantiated bullish tips to followers, and then dumped their shares at a massive profit, leaving retail investors with heavy losses.
The action followed unauthorised and misleading market recommendations broadcast on prominent social media platforms.
As part of efforts to protect retail investors, the market regulator has restrained the entities and individuals involved from accessing the securities market.
Among the key operators named in the regulatory crackdown are some social media influencers and unregistered investment advisors. These individuals leveraged platforms like Telegram and WhatsApp to artificially inflate trading volumes and prices in specific corporate scrips.
The action marks an aggressive push by SEBI to curtail the rising threat of "finfluencer"- driven market misconduct. In its interim order, SEBI highlighted the systemic danger posed by such digital manipulation loops.
"The utilisation of social media platforms to broadcast distorted or fabricated stock recommendations to a vast audience not only subverts the integrity of the market but severely damages retail investor confidence," the order said.
"Such deceptive practices create an artificial marketplace, and the regulator will take stringent, preemptive action to neutralise these entities before greater harm is inflicted on the financial ecosystem," it added.
Alongside market bans, the regulator has ordered the immediate freezing of the bank accounts associated with the perpetrators.
It has also mandated the impounding of all unlawful gains accumulated through the fraudulent trades.
SEBI has granted the barred individuals 21 days to file their objections or seek a personal hearing.
The regulator said that further deep-dive forensic investigations into the network's financial trails are actively underway.
— ANI
Reader Comments
It's about time! These social media influencers were treating the stock market like their personal ATM. They'd buy a stock, hype it up to their lakhs of followers, and then dump it at the peak. Retail investors like my father who trusted these "experts" got badly burned. SEBI should also ban them from using social media for 5 years.
This is a step in the right direction. The "pump-and-dump" schemes are rampant globally but in India, the sheer scale of Telegram groups with 50k+ members following unverified tips is frightening. SEBI freezing bank accounts is a strong deterrent. Hope this leads to better financial literacy initiatives too.
While I support the crackdown, SEBI should also go after the platforms that allow this to happen. YouTube, Telegram, WhatsApp - they earn ad revenue from these fake gurus. Also, SEBI needs to make registration process for advisors simpler, so genuine market experts don't feel forced to operate illegally. Just banning isn't enough - we need a proper ecosystem for small investors.
As a first-time investor, I nearly fell for one of these schemes. They show flashy lifestyle, fake screenshots of profits, and use urgency tactics like "limited seats for this stock tip". SEBI's awareness campaigns need to target young people on Instagram where these finfluencers thrive. Good move but more preventive education needed 🧠
The problem is deeper than just a few bad actors. Many finfluencers have built legitimate followings by giving free basic education, but then cross the line into giving stock tips without SEBI
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.