The Securities and Exchange Board of India (SEBI) has initiated a major step to fight the growing issue of investment fraud spreading on social media sites. Sensing the susceptibility of investors to fake schemes on sites such as YouTube, Facebook, and Instagram, SEBI is imposing a new regulatory system.
This framework compels all intermediaries registered with SEBI, including investment advisers and brokers, to seek social media platforms’ prior approval in the form of Google and Meta before posting any advertisement pertaining to investment products and services.
This proactive step is taken as a direct attack against the increase in spurious activities through which unethical players are using social media to entice unsuspecting investors with promises of assured returns, invented testimonials, and deceptive online trading tutorials. By making advance approval compulsory, SEBI is seeking to layer verification and ensure that only valid and approved intermediaries can spread investment-related information.
To enable this process, SEBI is mandating all registered intermediaries to register themselves on social media platforms using their official email IDs and mobile numbers, already registered with SEBI. Then the social media platforms will make it a point to verify the genuineness of these intermediaries prior to giving them the approval to post ads. This authentication process will act as a filter to eliminate fake entities and save investors from their possible financial losses.
In order to make the smooth rollout of these new guidelines possible, SEBI has set April 30, 2025, as the deadline for all registered intermediaries to update their contact information in the SEBI database. This action is important in order to ensure accurate records and facilitate easy verification by both SEBI and social media platforms.
By taking a proactive approach to tackling investment fraud on social media, SEBI seeks to promote greater transparency, strengthen investor protection, and reduce the risks posed by false financial information being shared online. This move is a major step towards building a safer and more secure investment ecosystem for all stakeholders.
