SEBI issues Clarifications on Finfluencer Guidelines

The Securities and Exchange Board of India (SEBI) has issued clarifications on Finfluencer Guidelines via issuing a circular.

The market regulator stated that brokers, mutual funds, investment advisers, exchanges, and other market participants “cannot be associated” with unregistered influencers, either directly or indirectly.

SEBI has now included mutual fund distributors, authorized persons, portfolio management service distributors, and alternative investment fund distributors in the scope of the new rules. According to the new clarifications, the managers of these products are now required to ensure compliance with these requirements.

The Circular Read as Follows:

Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2024, Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Fourth Amendment) Regulations, 2024 and Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2024 have been published in the Official Gazette on August 29, 2024.

These regulations inter alia provide that persons regulated by the Board, MIIs (stock exchanges, clearing corporations, depositories), and agents of such persons/MIIs shall not have any direct or indirect association with another person who-

(i) provides advice or any recommendation, directly or indirectly, in respect of or related to a security or securities, unless the person is registered with or otherwise permitted by the Board to provide such advice or recommendation; or

(ii) makes any claim, of returns or performance expressly or impliedly, in respect of or related to a security or securities, unless the person has been permitted by the Board to make such a claim.

The person regulated by the Board (including recognized stock exchanges, clearing corporations and depositories) is required to ensure that any person associated with it or its agent does not engage in the activities mentioned in clauses (i) or (ii) above.

It has been clarified that the term “another person” shall not include a person who is engaged solely in investor education, provided that such a person does not, directly or indirectly, indulge in any activity as referred to in clauses (i) or (ii) above.

In this regard, Annexure A contains details and clarifications on the provisions provided in the form of frequently asked questions. This is designed to provide direction for compliance to persons regulated by the Board, MIIs, and their agents regarding their association with another person.

This circular is issued in exercise of powers conferred under section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 36 of Securities and Exchange Board of India (Intermediaries) Regulations, 2008, Regulations 50 of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 and Regulation 96 of Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018, to protect the interests of investors in securities market and to promote the development of, and to regulate the securities market.

For Official Circular Download PDF Given Below: