‘Murgi, ‘Machli’, ‘Chai'”: Finfluencers Create Code Words To Escape SEBI

For some time now, there has been a growing crackdown on finfluencers or financial influencers in the country.

Alert flags were also raised when Finance Minister Nirmala Sitharaman spoke about it at an event in April this year saying “Social influencers and financial influencers are all out there but a strong sense of caution is required in each one of us to make sure we do double-checking, counter-checking.”

Apparently, reports revealed that not all such finfluencers were certified financial advisors and post this Securities and Exchange Board of India (SEBI) began to plan on how to regulate this sector more and more.

Given the environment, it has come out that finfluencers are using code words and cryptic phrases to get around the scrutiny by SEBI.

What Are Finfluencers Doing?

SEBI is still in the early stages of creating the regulations, but it is claimed that they will be released in the coming months.

Among some of the rumoured regulations, it is believed that such influencers will have to disclose information like qualifications, experience, conflict of interest and more beforehand to concerned authorities. They will also be restricted from making statements that are either false or misleading.

According to reports, finfluencers are renting a registration number where they basically rent out research analysts’ (RA’s) licences for a fee. Besides that, they are also disguising their ‘buy’ and ‘sell’ calls on their YouTube channels using phrases that are clearly code for something else. As per reports, one YouTube channel that gives such financial advice uses phrases like chai (tea) and phal (fruit).

So when they say “hum chai pee rahe hain” (we are drinking tea) apparently it means that the index could fall and their followers should buy a put. To signal when the index could go up they say something like “hum phal kha rahe hain” (we are having fruit).

Another channel uses the phrase “machli mar gayi” (the fish died) to indicate when price could fall and “murgi kha rahein hain” (we are having chicken) which means that the prices are about to go up.

Read More: ResearchED: Why Are Influencers Called To IIT Even Though They Have No Connection With It?

Financial influencers are said to be struggling with even getting RA license because one there is no clarity on the regulations and two the RA regulations are considered to be extremely restrictive and almost impossible to follow.

As per a Moneycontrol report, a finfluencer who did not want to be named said that “Every finfluencer has broken at least one RA rule,” and that the RA license applications for several such influencers have been getting rejected for several months now due to lack of credibility.

What Is SEBI Doing?

SEBI already started with the regulations when in February 2023, a circular by the National Stock Exchange (NSE) put out that “any payment made by brokers to influencers/bloggers would require prior approval of the exchange and should include certain standard disclaimers.”

Another point included in it was that finfluencers with more than 10 lakh subscribers were not eligible for advertisements.

But reportedly, SEBI only restricted mutual funds, registered investment advisors (RIAs), and research analysts (RAs) from using such influencers and giving them ads. Stock brokers were left out of these regulations and they have supposedly been using it to their advantage.

As per a Livemint report though, finance content creator Shreyaa Kapoor also commented “Nirmala Sitharaman ji said that not right now, but they might regulate them in the future and as they should. Only thing is that they should definitely speak to folks like us, folks like the creator itself, speak to the stakeholders, understand the risk involved, and understand the problem from the government’s end because the government is also saving the interest of the retail investors which is fair. But I think the regulation should be a mutual consensus and not a one-sided street.”

Image Credits: Google Images

Feature Image designed by Saudamini Seth

Sources: Moneycontrol, CNBCTV18, Livemint

Find the blogger: @chirali_08

This post is tagged under: Finfluencers SEBI, social media influencers, finance, finance in India, finances, finfluencers, indian finance, influencers, YouTube, Youtube influencers, youtubers

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