Known as the “She-Wolf of the Stock Market,” Asmita Patel is a well-known financial influencer who amassed a sizable online following, with hundreds of thousands of Instagram followers and over half a million YouTube subscribers. Her goal, she said, was to “make India trade,” charging thousands of rupees for stock trading lessons. Patel and six other people were recently prohibited from trading by the SEBI crackdown, which claimed that she made millions of dollars by selling illicit stock advice under the cover of investor education.
Through private Telegram channels, Zoom calls, and courses, SEBI accused Patel of encouraging investors and students to trade particular stocks through her advice business without requiring registration. 42 participants reported trading losses and requested compensation, prompting the regulator to take action. Millions of rupees that Patel and her accomplices earned between 2021 and 2024 are now being seized by SEBI.
Patel’s situation is but one illustration of how social media has changed how Indians receive financial advice. The regulatory agency was forced to intervene and enforce stringent regulations to stop false financial advice since influencers were amassing enormous fan bases. It is still unclear if SEBI’s response is adequate or if it is too little, too late.
Why Are Influencers on Social Media Under Investigation?
In the post-pandemic market boom in India, the number of new retail investors increased dramatically. By 2023, there were over 150 million online trading accounts, up from 36 million in 2019, according to brokerage firm Zerodha. Self-described “investment gurus” like Patel, who promised rapid riches, became popular as a result of many of these novice investors looking to social media for trading advice.
With just 1,400 financial counselors and 950 certified investment advisors in the nation, these influencers filled a knowledge gap and gained millions of followers. But the majority functioned without regulatory supervision, making it difficult to distinguish between unregistered investment advice and financial education.
The SEBI crackdown has prohibited at least a dozen influencers, including a Bollywood celebrity, from giving trading advice in an effort to stop deceptive practices. Additionally, the regulator has barred brokerages from working with influencers who make false promises about returns or offer illegal investment suggestions.
Several of these influencers have used social media to create whole company empires. Trading platforms, brokerages, and fintech businesses seeking to increase their market share find them to be appealing partners due to their sizable fan bases. A digital environment where influencers have a significant impact on investment decisions has emerged as a result of India’s retail trade sector’s explosive growth. But not all of this advice is trustworthy or compatible with the law, as some investors have discovered the hard way.
What Are the New Market Educator Guidelines from SEBI?
Strict standards have been implemented by SEBI to distinguish between legitimate education and illicit stock advice. The new regulations prohibit instructors from using live market data for teaching or providing real-time trading advice. Rather, they are forced to teach trading tactics using data that is at least three months old.
These regulations, according to critics, might impede appropriate financial education. “Curbing unregulated stock tips is necessary, but requiring trading schools to use outdated data instead of live market scenarios crosses into over-regulation,” stated a former SEBI official.
Some people think the SEBI crackdown is unclear. According to a market analyst and chartered accountant with a sizable social media following, “even sincere content creators who are pointing people in the right direction will lose subscribers and brand deals due to uncertainty over what is allowed.”
The new rules provide a problem for many respectable financial educators. How can they comply with SEBI’s regulations while yet providing insightful, practical information? Finding the ideal balance between regulatory control and making sure that legitimate educators are not unjustly punished is the difficult part.
Is SEBI Behaving Too Selectively and Too Late?
According to several analysts, SEBI ought to have taken action sooner. “When trading platforms initially began paying influencers to promote their products, the regulator ought to have stepped in. The issue has now grown too large,” a seasoned financial writer stated. Opponents contend that SEBI has singled out a few influential people to serve as an example rather than implementing a clear, all-encompassing policy.
The SEBI crackdown has come under fire for being uneven and tardy, despite its stated goal of safeguarding small investors. High-profile influencers have been accused by thousands of investors of fabricating their success in order to offer pricey trading courses and collect money from brokerage recommendations. Patel made slightly more than $13,700 in trading profits over five years, while she made more than $11.4 million from offering courses, according to SEBI’s ruling against her.
Some have questioned whether SEBI is genuinely dedicated to eliminating false financial advice or if it is just using a select few people as high-profile instances because of its selective enforcement. A stronger, more aggressive regulatory framework is required in light of the growing prevalence of digital financial literacy in order to stop future instances of widespread financial misdirection.
How Will SEBI Keep an Eye on Internet Content Without Going Overboard?
Controlling financial influencers is a difficult task. Regulators frequently find it difficult to keep up with the rapid evolution of technology. Compared to its equivalents in established markets such as the United States, SEBI possesses more authority, such as the ability to conduct searches, freeze bank accounts, and prohibit trading without a court order.
According to reports, SEBI is requesting even more authority to examine social media conversations and call logs to look into influencer-led market infractions. The difficulty, meanwhile, would be in making sure that SEBI’s regulatory measures adequately safeguard regular investors without suppressing real financial education.
Influencer-led financial advice is here to stay in the ever-changing world of digital finance. It remains to be seen if SEBI’s actions would be sufficient to discourage false financial advice while promoting moral financial education. Whether it can achieve a balance between protecting investors and fostering ethical financial education will be determined by the SEBI crackdown.
Although the future is uncertain, one thing is certain: India’s financial influencer market is changing dramatically. There has never been a greater need for regulators like SEBI to provide clear, practical guidance as the number of individual investors continues to rise. It will take time to determine whether SEBI’s actions will have the desired effect or if they will cause greater hesitancy and misunderstanding among legitimate financial educators.
Experts caution that a more organized and open approach is required to guarantee the market stays accessible and fair, even though SEBI’s moves represent a significant step toward protecting individual investors. Finding a method to stop deceptive financial advice without deterring sound financial education is essential to effective regulation. The regulatory frameworks intended to shield investors from dishonest actors and promote responsible financial literacy must change along with the financial sector.
