AMFI-Registered Finfluencers May Face SEBI Investigation: Details Inside

The Securities and Exchange Board of India (SEBI) is planning to review financial influencers, or ‘finfluencers,’ who are registered as mutual fund distributors (MFDs) with the Association of Mutual Funds in India (AMFI).

This step is meant to consolidate advertisement guidelines among regulated institutions and curb the spread of financial misinformation on social media platforms.

SEBI’s Regulatory Efforts on Financial Influencers

The SEBI Chairperson underscored the necessity of uniform advertising guidelines for all SEBI-regulated institutions.

He noted I have been in discussions with various associations to streamline regulations, eliminate redundancies, and potentially consolidate some regulations.

AMFI oversees mutual fund distributors (MFDs), but if it fails to do so, he assured that the surveillance systems of SEBI will intervene.

In recent developments, SEBI also partnered with Meta and Google to remove 70,000 unregistered finfluencers from social media platforms.

Concerns Over Unregulated Financial Influencers

Former SEBI Chairperson Madhabi Puri Buch had previously stated that since mutual fund distributors (MFDs) are agents of SEBI-regulated entities, mutual funds are ultimately responsible for their agents’ actions.

Even though India has a huge number of MFDs, they are still lacking SEBI-registered investment advisors, RIAs.

The SEBI Chairperson recognized this gap and urged more people to take up the profession.

High Influence of Finfluencers on Investor Behavior

A report by the CFA Institute showed that 82% of social media-influenced investors followed the guidance of finfluencers, and 72% of them made gains.

But a mere 2% of these finfluencers are registered with SEBI, raising questions over the spread of misinformation and absence of regulatory checks.

An expert pointed out that certain finfluencers go out of their way to avoid regulation, and the fraud ones have the potential to destroy naive investors.