Sebi chairperson Madhabi Puri Buch's cryptic message is a warning to finfluencers

It may well just have been a settlement order that the capital markets regulator Securities and Exchange Board of India (Sebi) recently passed against well-known financial influencer -- finfluencer, in market parlance -- P R Sundar, but if the no-nonsense Sebi chairperson Madhabi Puri Buch is to be believed, the regulatory watchdog has a strategy in place to rein in the vast community of unregulated or unregistered investment advisors.

“There is something cooking in the oven,” she said when asked about the way Sebi is trying to rein in unregistered investment advisors.

While she declined to elaborate further, it is evident that the capital market watchdog is trying to regulate investment advisors who are doling out recommendations on social media platforms like YouTube, Instagram and even chat applications like WhatsApp and Telegram.

On May 25, Sebi settled an ongoing investigation against P R Sundar by banning the  finfluencer with over a million followers on YouTube from the securities market for a period of one year for allegedly providing advisory services – daily stock investment/trading calls -- without the requisite registration from the regulator.  

The Chennai-based influencer was further directed to disgorge the fees that he had taken -- along with interest -- that amounted to a little over ₹6 crore.

In another matter, the regular cautioned Gunjan Verma for allegedly giving investment advice in return for a consideration and acting as an investment advisor without the requisite licence from the regulator.

“I find it appropriate to caution the Noticee (Gunjan Verma) to refrain from engaging in transactions in securities on behalf of others and also to abstain from indulging in any unregistered activity which may be in violation of the securities laws, and can only be carried out after compliance of Regulations framed by SEBI,” stated the Sebi order issued on May 25 while highlighting the fact that the evidence was insufficient and hence only a caution was issued.

These orders, however, assume a great deal of significance as the last few years – starting from 2000 onwards – have seen finfluencers attain cult status with some of the most popular ones boasting of followers in millions.

Simply put, a finfluencer is an individual who influences the financial investment decision of an individual by doling out advice or recommendations. This advice could be for stock investment, financial planning or just about anything related to the way one should invest his or her money.