SEBI annual report: AI tools deployed to track finfluencers misleading investors

SEBI Chairman Tuhin Kanta Pandey, in the market regulator's FY26 annual report, said the regulator has deployed artificial intelligence-based tools to track unsolicited financial advice on social media and other unauthorised digital activity that could mislead investors. He said SEBI has made a generational leap in supervisory technology (SupTech) through Project Sudarsan, which monitors unsolicited financial advice on social media, and SEBI R(AI)DAR, an AI-enabled platform for reviewing advertisements.

These tools, Pandey said, allow SEBI to actively identify unauthorised digital activity and finfluencers who may mislead investors through unverified claims.

Pandey said the markets regulator also entered into a first-of-its-kind partnership with Google Play for the verified app label initiative, which will provide a visible signal of regulatory legitimacy on platforms where investors discover stock trading apps. This digital vigilance, Pandey said, has become more necessary after its latest survey found that 62 per cent of investors are influenced by finfluencers, many of whom operate without accountability or verified performance data.

To address information asymmetry in performance reporting, Pandey said the launch of the past risk and return verification agency, or PaRRVA, marks a transformative step towards institutionalising performance claims. He said PaRRVA would provide an independent digital audit of claims made by intermediaries.

On market manipulation, the SEBI Chairman said market integrity continues to be treated as non-negotiable. He said a market may be large, liquid and technologically advanced, but it can remain strong only if investors trust that it functions fairly. Pandey said SEBI has continued to act against market abuse, including manipulation in the securities and derivatives markets, pump-and-dump schemes, insider trading, front-running and corporate frauds. He said innovation, liquidity and participation are welcome, but must operate within the boundaries of fair conduct, transparent disclosure and accountability.

On derivatives markets, Pandey said SEBI undertook calibrated measures to make the segment more orderly, resilient and risk-aware. These included reducing expiry-day concentration, rationalising weekly index options and strengthening intraday position-limit monitoring.

Pandey said these initiatives are aimed at preserving the role of derivatives in hedging, liquidity and price discovery, while ensuring that market activity remains within prudent guardrails and does not compromise market stability or integrity. He added that the governance framework of market infrastructure institutions, or MIIs, was strengthened to ensure that public interest comes first.

Looking ahead, Pandey said SEBI will continue to focus on identifying and removing regulatory redundancies, simplifying procedural requirements and leveraging technology to ease the compliance burden. He said SEBI will continue to deepen the cash equities market to spur capital formation, revamp the Securities Lending and Borrowing scheme to improve price discovery and facilitate interlinkage between the cash and derivatives segments, and strengthen India’s commodity markets in both agri and non-agri segments.

Pandey also said SEBI will introduce a fast-track mechanism for the launch of AIF schemes, develop a single-window clearance system for intermediaries associated with multiple MIIs, launch the SEBI Setu Portal as a market intermediary interface, and take up a pilot project on the tokenisation of corporate bonds using distributed ledger technology.

Meawnhile, Pandey said SEBI is also advancing its cyber security efforts by preparing the market for quantum-era risks and developing long-term technology road maps for MIIs. In its annual report, the regulator placed digital surveillance, market integrity, derivatives oversight and compliance simplification at the centre of its agenda, while outlining further steps to strengthen investor protection and market processes.