NEW DELHI: In a significant move, the Securities and Exchange Board of India (SEBI) has taken stringent action against Asmita Patel, Asmita School Global, and four other associates, spotlighting the growing risks associated with unregistered financial influencers, or ‘finfluencers,’ and their impact on retail investors. SEBI has impounded over Rs 53 crore collected by these entities as fees for various investment-related courses, marking a pivotal moment in the regulator’s efforts to curb unregulated financial advice.
According to SEBI’s order, Patel allegedly provided stock recommendations to investors through private Telegram channels, Zoom meetings, and educational courses without obtaining the mandatory registration from the regulator. The order further revealed that Patel encouraged participants to quit their jobs and enroll in her course, MPAT, promising them the opportunity to achieve “something big.”
This case underscores a broader trend of unregistered finfluencers leveraging platforms like Telegram and private online classes to lure retail investors with promises of quick wealth. Often disguised as educational sessions, these influencers frequently offer advisory services, urging participants to invest in specific avenues. However, such schemes often result in significant financial losses for unsuspecting investors.
A fund manager at a leading asset management company (AMC) highlighted the lack of formal training and licensing among many finfluencers. Unlike registered financial advisors who adhere to strict regulatory guidelines and fiduciary responsibilities, these influencers operate without oversight. “Without proper regulation, investors are often left to navigate advice that hasn’t undergone rigorous analysis,” the fund manager noted.
The fund manager also pointed to potential conflicts of interest, as many influencers earn affiliate commissions or sponsorship fees, which could compromise the objectivity of their recommendations. In some cases, influencers have been accused of promoting products or even engaging in pump-and-dump schemes, where they hype an asset before selling their own holdings, leaving followers to bear the losses.
Market experts have warned that the influence of trending tips and viral content can lead to herd behavior among investors. Driven by the fear of missing out (FOMO) on high-return promises, retail investors often bypass proper due diligence, making emotional decisions that can result in substantial financial losses when market conditions shift.
A senior analyst at a leading brokerage firm emphasized the importance of skepticism and independent research. “Investors should remain wary of hype-driven recommendations and always verify claims with multiple reliable sources. Consulting licensed professionals for personalized advice is crucial,” he advised.
In response to the growing menace of misinformation and investor losses, SEBI has intensified its efforts to rein in unregistered finfluencers.
To further curb the misuse of social media platforms, SEBI issued a draft circular last month restricting the use of live share price data by finfluencers who disguise stock tips as educational content. The regulator clarified that individuals engaged solely in education cannot provide investment advice or recommendations unless they are registered advisors.