Finfluencer Frenzy Under Fire As SEBI Strikes Back

In an era where social media shapes our financial decisions, the rise of unregistered “finfluencers” has prompted the Indian market regulator, the Securities and Exchange Board of India (SEBI), to take unprecedented regulatory action. The latest in the line of fire is Asmita Jitesh Patel.

The What?

A well-known influencer, Patel is often dubbed the ‘She-Wolf Of Stock Market’ and the ‘Options Queen’. The regulator has banned six entities connected to Patel — including her global educational programme — from operating in the capital markets. According to the new directive, SEBI has directed that over Rs 53 crore that these entities collected as course fees must be returned to the participants of the programme, while an additional Rs 104.63 crore in fees is now under scrutiny. Although these figures have been reworked from earlier reports, they highlight the severity of the penalties being imposed.

SEBI’s actions are not limited to this singular case. Following the post-COVID surge in financial influencers around 2021–2022, the watchdog began stringently monitoring content on platforms like YouTube, Instagram and X. Over time, thousands of posts have been flagged and numerous unregistered influencers have been fined. In a recent draft circular, SEBI has also taken a preventative step by prohibiting finfluencers from using real-time stock price data for educational purposes. Instead, a three-month delay is now mandated to reduce the risk of market manipulation.

“There is a difference between providing financial education and stock tips. SEBI should focus on ensuring that finfluencers do not provide stock-specific advice in the garb of financial education. However, it is important for SEBI to come out with clear rules as to what constitutes financial education and what constitutes illegal or manipulative activity. Merely reporting factual information relating to stocks should not be restricted, provided information is presented fairly, without deceiving or misleading investors,” Armaan Patkar, partner at Argus Partners, who has advised clients on securities and financial regulatory disputes with SEBI and India’s central bank, the Reserve Bank of India, told The Core.

Why Is This Important?

SEBI’s crackdown is driven by a simple, investor-focused rationale: protecting the retail investor from misleading, unregulated advice. As Patkar explains, “Finfluencers have several modes of earning revenue, such as sponsorships or advertisements. This may give rise to conflict of interest or involvement in paid pump and dump schemes. This makes clear disclosure of any conflict of interest important.”

This is a fundamental issue because many influencers operate by sharing their personal strategies — often with a disclaimer that they are not offering a recommendation — yet they wield significant influence over their followers. By restricting access to recent market data, SEBI is taking a preventive approach similar to the blackout periods imposed on listed company employees around quarterly results. The idea is to ensure that any educational content remains just that — educational — and does not inadvertently drive impulsive trading decisions.

Moreover, in May 2023, SEBI further tightened its grip by banning partnerships between registered market participants — such as stockbrokers and mutual funds — and unregistered finfluencers. This move was designed to sever any indirect legitimisation of unauthorised advice. Yet, the landscape remains complex as some brokerages are now lobbying for a regulated form of these partnerships. SEBI is also eyeing broader investigative powers, seeking access to WhatsApp chats, Telegram messages, and call records. While such measures are still under judicial review, they show that the regulator is determined to curb any covert manipulation.

Does It Change My Life?

For you, the retail investor, these regulatory measures carry significant implications. On the one hand, SEBI’s actions are a welcome move towards ensuring that the advice you receive is not tainted by hidden commercial interests. By limiting the use of fresh market data, the risk of being swayed by impulsive, real-time recommendations diminishes. On the other hand, there is a legitimate concern over freedom of expression. Several macroeconomic content creators on YouTube—who merely explain market trends without giving direct stock advice—have had their videos removed under SEBI’s directive. If SEBI issues takedown notices without sufficient clarity or opportunity for the creators to respond, this could stifle legitimate financial commentary.

Affected creators can, however, challenge such decisions in the high court, “Harsh actions by SEBI can be challenged with success, particularly in the absence of clear guidelines defining what constitutes illegal or manipulative activity in this space,” Patkar said.

He also added that SEBI’s powers are strong as they are, will only succeed depending on how courts interpret them if challenged legally on freedom of speech grounds. For instance, the Securities Appellate Tribunal set aside SEBI’s decision in the WhatsApp leak case, holding that an element of knowledge was required if WhatsApp forwards were to be treated as a violating SEBI insider trading regulations. "A similar decision may be required to clarify the scope of legitimate financial education," added Patkar.

“Penalties can be large, especially in disgorgement cases, where people have to return illegal profits. But perhaps what’s needed now is for SEBI to issue clearer guidelines on what constitutes market manipulation in the context of influencers. That clarity would help influencers stay compliant instead of working in a grey area,” explained Patkar

In balancing investor protection with free speech, the outcome of any such legal battles will set important precedents for how financial education is regulated in the digital age.

In summary, while SEBI’s powers remain robust, the clarity of its guidelines is crucial. For now, the crackdown is a necessary step to safeguard the market — and ultimately, your investments — against unregulated influencers.