SEBI Mandates Authentication for Intermediaries’ Advertising on Social Media Networks

The Securities and Exchange Board of India has urged all registered intermediaries to use their registered contact information while promoting on social media sites. This new regulation attempts to increase openness and safeguard investors from false marketing that has become commonplace online.

Required enrollment:

All SEBI-registered intermediaries must register on social media sites like Google, Facebook, Instagram, YouTube, WhatsApp, and X using the email addresses and cellphone numbers they registered on the SEBI SI Portal. This criterion is intended to guarantee that only verified companies may post adverts, hence reducing fraudulent activity.

Deadline for compliance:

Intermediaries must update their contact information in the SEBI intermediary database by April 30, 2025. This deadline underlines the need for compliance as SEBI increases its efforts to protect investor interests.

Preventing Fraudulent Activities:

The directive comes in reaction to a major surge in securities market fraud perpetrated via social media platforms. Perpetrators have enticed victims with fraudulent promises such as online trading courses and promised profits, resulting in significant financial losses for naïve investors.

Verification Process:

Social media networks will be responsible for validating the identity of registered intermediaries before they can submit adverts. This verification procedure ensures that only reputable firms may advertise their services online. In its recommendation, SEBI cautioned investors to be wary of unregulated firms and fraudulent schemes functioning on electronic platforms. 

Prior caution:

SEBI has previously warned investors about the risks connected with electronic platforms that facilitate trades in unlisted securities, warning against disclosing sensitive personal information on these sites.

• This regulation change is anticipated to improve investor protection by: considerably
• Reduce the number of false adverts that mislead potential investors.
• Increasing responsibility among middlemen seeking to market their services.
• Promoting a safer investing environment since certified intermediaries are more likely to comply with regulatory requirements.