SEBI cracks down on 'Finfluencers' with new rules on stock market education

The Securities and Exchange Board of India (SEBI) has taken a significant step to curb the activities of unregistered stock-market influencers, commonly known as 'finfluencers.' In a circular issued late on January 29, 2025, SEBI clarified that individuals offering stock market education can no longer use live market prices in their teachings. Instead, they must operate with a three-month delay in pricing data, effectively ending the practice of offering real-time stock tips and trading advice.

This move is expected to put an end to the thriving but controversial business of finfluencers who have often operated under the guise of stock-market education while engaging in illegal investment advisory activities without the necessary SEBI registration.

Previously, SEBI had restricted the association of registered entities with unregistered ones through a circular issued in October 2024. However, the latest directive aims to eliminate the final loophole in this space—unregistered entities providing market advice while claiming to offer educational content. According to the new circular, any person or entity providing stock-market education must avoid providing investment advice or making performance claims unless they are registered with SEBI.

The circular explicitly states that persons engaged in education cannot use live market prices or offer advice on specific securities. Instead, they must use data with a minimum of a three-month lag to avoid promoting real-time stock recommendations. This is seen as a major blow to many finfluencers who have built large followings by offering stock tips based on live market trends.

Registered entities are now prohibited from advertising or associating with finfluencers involved in such prohibited activities. The updated regulations are expected to impact several online platforms and influencers who have built their businesses on offering real-time stock trading advice without the necessary regulatory approvals.

While SEBI's circular emphasizes that investor education itself is not banned, it specifies that individuals and organizations offering such education must not provide investment advice without appropriate SEBI registration or make any performance claims that are not permitted by the regulator.