Securities and Exchange Board of India (SEBI) has directed all registered intermediaries to utilise their registered contact details when advertising on social media platforms. This new guideline aims to enhance transparency and protect investors from misleading advertisements that have proliferated online.
Mandatory Registration:
All SEBI-registered intermediaries must register on social media platforms such as Google, Facebook, Instagram, YouTube, WhatsApp, and X (formerly Twitter) using their email addresses and mobile numbers as registered on the SEBI SI Portal. This requirement is designed to ensure that only verified entities can publish advertisements, thereby curbing fraudulent activities.
Deadline for Compliance:
Intermediaries are required to update their contact details in the SEBI intermediary database by April 30, 2025. This deadline emphasises the urgency of compliance as SEBI ramps up its efforts to safeguard investor interests.
Curbing Fraudulent Activities:
The directive comes in response to a significant increase in securities market frauds facilitated through social media channels. Perpetrators have been enticing victims with deceptive promises, including online trading courses and guaranteed returns, leading to substantial financial losses for unsuspecting investors.
Verification Process:
Social media platforms will be responsible for verifying the identities of registered intermediaries before they are permitted to upload advertisements. This verification process is crucial in ensuring that only legitimate businesses can promote their services online.
Advisory to Investors:
In its advisory, SEBI has urged investors to remain vigilant against unregulated entities and fraudulent schemes operating on electronic platforms. The regulator has warned against engaging with unauthorised platforms, reiterating that such interactions violate SEBI rules.
Previous Warnings:
SEBI has previously cautioned investors about the risks associated with electronic platforms facilitating transactions in unlisted securities, advising against sharing sensitive personal information on these sites.
This regulatory move is expected to significantly enhance investor protection by:
Reducing the prevalence of fraudulent advertisements that mislead potential investors.
Increasing accountability among intermediaries who wish to advertise their services.
Promoting a safer investment environment as verified intermediaries are more likely to adhere to regulatory standards.
SEBI's directive marks a critical step towards fostering a more secure and transparent securities market in India. Verification for intermediaries advertising on social media platforms, SEBI aims to protect investors from fraudulent schemes while promoting responsible advertising practices within the financial sector.