SEBI cautions investors of fraudulent advisors; intensifies action
SEBI cautions investors of fraudulent advisors; intensifies action
It ensures that promotion is done only by registered specialists
The Securities and Exchange Board of India (SEBI) has begun taking action on unregistered investment advisors and so-called finfluencers who mislead retail investors with risky or fraudulent recommendations.
It warned consumers to ignore flashy stock market tips on WhatsApp, Telegram, YouTube, or TV, promising ‘sure-shot multibaggers’ or ‘guaranteed profits’.
Kamlesh Chandra Varshney, Whole-time Director, SEBI, stated that the regulator was working with Meta (Facebook, Instagram, WhatsApp) to verify financial ads and ensure promotion only by registered advisors.
A monitoring team has begun flagging illegal stock tips and misleading posts are being taken down on Google and Meta.
Meanwhile, enforcement action has been initiated against TV experts, penny stock manipulators, and influencers who push unregistered advice, posing as ‘educators.’
Varshney clarified, “We have no objection to genuine educators, but will act against those luring investors with false promises.”
SEBI is also tightening the Initial Public Offering (IPO) rules to protect small investors.
Its consultation paper proposed that, on conservative valuations, merchant bankers and anchor investors are advised to keep IPO pricing realistic to prevent post-listing crashes. Similarly, large companies (like the National Stock Exchange) may get 10 years instead of 5 years to meet the 25 percent public shareholding norm, making mega IPOs more feasible.
This means investors will see more large IPOs in the market, reducing the risk of losing money after listing. Investors will have fewer chances of being duped by ‘fake gurus’ on social media. They will have easier access to large, high-quality companies going public.
The market regulator is also initiating campaigns in schools and universities to help young Indians understand the basics of investing and differentiate between genuine advisors and fraudsters.
