According to Sebi, such differentiation is essential to avoid misleading investors.Moreover, while publishing videos or other content on social media platforms (SMPs), regulated entities should ensure that their material does not contain anything prohibited by law or anything that may harm the interests of investors, Sebi suggested in its consultation paper.
“All persons supervised by the Board of Directors and their agents (mutual fund distributors, portfolio management services distributors, etc.) will prominently disclose their registered name and registration number on the homepage of their social media channels, as well as next to any of the videos/content uploaded by them,” the regulator said.
Sebi said this will help viewers identify content uploaded by a regulated entity or its authorized agent. Sebi also proposed strict content norms and suggested that regulated entities and their agents should ensure that their communications do not contain any promise of guaranteed returns, statements prohibited by law and content that is false, misleading, biased or likely to deceive investors. In addition, they should avoid statements that take advantage of investors’ lack of knowledge or that exaggerate or misrepresent a product’s risk-reward profile.
They should also be prohibited from referring to past performance unless expressly permitted by Sebi. Use of Sebi logo, references to Sebi offices or officers, or associations, directly or indirectly, by persons offering investment advice or performance claims without Sebi’s approval should also be banned, the regulator suggested.
Further, Sebi clarified that if any part of the social media content, explicitly or implicitly, promotes a regulated entity or its products or services, such content should be treated as an advertisement.
Consequently, it must comply with the provisions of the advertising code.
On Thursday, Sebi chairman Tuhin Kanta Pandey highlighted that the regulator has noticed more than 1 lakh cases of unlawful or misleading online content on social media and search platforms, including Meta, Google, Telegram and X, in the past 18 months.
In line with this, regulated entities are not allowed to affiliate with unregulated advisors on social media, thus preventing the spread of false claims and harmful influences, he stated.
Earlier this month, Sebi announced that it has intensified engagement with major social media and internet platforms, urging them to strengthen safeguards against fraudulent investment-related content.
The regulator had insisted on a verification process that ensures that only Sebi-registered entities can advertise investment products and proposed the introduction of a clear verified label for legitimate trading apps to help users avoid fake platforms.
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