The Rise of Finfluencers – Legal spotlight on the Hashtags, Hype... and the Law

Who are Finfluencers?

"Finfluencer" or Financial Influencers are individuals who use digital platforms such as social media, blogs, or video channels to provide advice, opinions or information related to finance. This may include topics like investing in the stock market, personal finance management, cryptocurrencies, and other financial products or services. Finfluencers often have a significant online following, and their views can influence the financial decisions of their audience.

Think of Finfluencers as energetic personal trainers in the financial gym, giving pep talks and quick tips for getting your finances in shape. But just as you’d want your trainer to be certified, in the investment world, Securities and Exchange Board of India ("SEBI") wants to be sure your financial coach isn’t leading you astray.

Legal grounds for Finfluencers

SEBI’s primary concern is investor protection. To ensure that the advice handed out online is authentic, transparent and compliant with financial regulations, SEBI mandates that anyone providing financial advice for a fee must be registered as an investment adviser. The SEBI (Investment Advisers) Regulations, 2013 are the primary rulebook. If a Finfluencer steps beyond general education and into telling you exactly what shares to buy or sell, especially for a fee, they need SEBI’s stamp of approval.

Unregistered advice, especially when it leads to losses or market disruption, risks regulatory action and penalties. SEBI’s recent advisories and press releases emphasise that investors should check whether their coach is actually certified.

SEBI also cautions investors against following unregistered advisors:

On January 29, 2025, SEBI brought about new guidelines under Section 16A of the Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2024 in order to regulate Finfluencers. This amendment was aimed at ensuring that only registered professionals offer investment recommendations.

Extract: 'Restriction in having association with certain persons16A -

(1)  No person regulated by the Board or the agent of such a person shall have any direct or indirect association, with another person who-

(i) provides advice or any recommendation, directly or indirectly, in respect of or related to a security or securities, unless the person is registered with or otherwise permitted by the Board to provide such advice or recommendation; or

(ii) makes any claim, of returns or performance expressly or impliedly, in respect of or related to a security or securities, unless the person has been permitted by the Board to make such a claim:

Provided that the provisions of this sub-regulation shall not apply in respect of an association through a specified digital platform.

(2) The person regulated by the Board shall ensure that any person associated with it or its agent does not engage in the activities mentioned in clauses (i) or (ii) of sub-regulation (1) without the necessary permission.' 

Finfluencers must also avoid undisclosed partnerships or paid promotions that could compromise their independence or mislead their followers. Transparency is key to maintaining trust within the financial market.

If a Finfluencer’s advice leads to misleading investments or market manipulation, SEBI can invoke its powers under the SEBI Act, 1992 to investigate and penalise such malpractices.

In essence, while Finfluencers may add colour and convenience to the financial marketplace, both the audience and the influencers themselves must keep a careful eye on the regulations that shape their actions.

Regulations and guidelines pertaining to Finfluencers are as follows:

SEBI (Investment Advisers) Regulations, 2013

• Any individual or entity offering investment advice for consideration (that is, for a fee or other compensation) must be registered as an Investment Adviser with SEBI.

• “Investment Advice” means any advice relating to investing in, purchasing, selling, or dealing in securities or investment products.

• Unregistered persons providing investment advice are in breach of these regulations and may be subject to SEBI action.

• Disclosure of conflicts of interest and client complaints redressal are also mandatory for Registered Advisers.

  
  

Extract: No person shall act as an Investment Adviser or hold itself out as Investment Adviser unless he has obtained a certificate of registration from the Board under these Regulations. (Source: SEBI (Investment Advisers) Regulations, 2013, Regulation 3)

SEBI (Research Analysts) Regulations, 2014

• If a Finfluencer publishes research reports or makes recommendations on securities/investments, they may be required to register as a Research Analyst with SEBI.

• These regulations focus on maintaining objectivity and transparency in reporting and analysis.

  
  

Extract: No person shall act as a Research Analyst or hold itself out as a Research Analyst unless it has obtained a certificate of registration from the Board under these regulations. (Source: SEBI (Research Analysts) Regulations, 2014, Regulation 3)

SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003

• Regulates misleading statements, market manipulation, and fraudulent activities related to securities recommendations.

• Finfluencers making false or misleading claims (intentionally or negligently) can face regulatory action.

  
  

Extract: No person shall indulge in a fraudulent or an unfair trade practice in securities. (Source: SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003, Regulation 3)

SEBI Press Releases & Advisories

• SEBI routinely issues Press Releases cautioning investors against following unregistered advisers and warning of the risks associated with advice from unregulated sources.

  
  

Related Case Law   

One of the most prominent and interesting cases was the Arshad Warsi Case in India where SEBI investigated alleged market manipulation involving social media personalities, including Bollywood actor Arshad Warsi. This case is especially relevant to discussions about Finfluencers and their responsibility under Indian securities laws.

Background -

In March 2023, SEBI took action against several individuals, including Arshad Warsi and his wife, for alleged involvement in manipulating the stock prices of Sadhna Broadcast Limited and Sharpline Broadcast Limited. The manipulation was allegedly executed through pump-and-dump schemes orchestrated via social media channels, including YouTube.

Key Legal Issues -

Market Manipulation: SEBI alleged that certain individuals coordinated with YouTube channels to post misleading videos about the stocks, encouraging unsuspecting investors to buy shares, thereby artificially inflating prices. After the price surge, these “operators” including some social media influencers and the Warsis sold their holdings at a profit, causing losses to investors.

Unfair Trade Practices: This conduct was found to be in violation of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

Finfluencer Liability: The case highlighted the regulatory risks for social media personalities (Finfluencers) who participate actively or passively in sharing or amplifying stock recommendations without due diligence or regulatory compliance.

SEBI’s Order -

SEBI passed interim orders restraining the Warsis and other named parties from buying, selling, or dealing in securities. SEBI also directed impounding of unlawful gains and issued show-cause notices.

Extract from SEBI’s Order:

“…the purpose of these misleading YouTube videos was to inflate the price and volume of the scrip so as to offload shares at a profit by the relevant entities. Such conduct constitutes fraud…in violation of Regulation 3 and 4 of the SEBI PFUTP Regulations, 2003…”

Impact and Relevance -

The Arshad Warsi case is a watershed moment for the Indian securities market, signifying that SEBI is actively monitoring the risks posed by Finfluencers and social media activities, and is prepared to use its enforcement powers to punish market manipulation. Finfluencers must thus exercise caution: making stock recommendations, sharing sponsored investment content, or amplifying misleading tips can attract not only regulatory scrutiny but also criminal and civil liability.

Why the rise of Finfluencers matters to you?

Finfluencers have quickly become the go-to guides for millions seeking financial wisdom, tips, and shortcuts online. Their reach, often amplified by catchy hashtags and viral trends can make investing look not just accessible but almost effortless. However, while this wave of digital democracy in finance brings benefits, it also comes with critical risks: unregulated advice, conflicts of interest, and, at times, outright market manipulation.

As an investor, you may find yourself drawn to a Finfluencer’s charisma or their record of “hot tips.” Yet, the line between genuine financial education and regulated investment advice is a thin one. SEBI regulations make it clear: any advice given for consideration—be it a fee, partnership, or indirect compensation must come from someone registered as an Investment Adviser or Research Analyst. This registration is not just a bureaucratic step, but a regulatory safeguard designed to ensure only qualified experts shape your investment decisions.

History is already telling. The Arshad Warsi case, where social media hype was used to artificially inflate stock prices, left many investors burnt and exposed the regulatory risks surrounding unchecked social media advice. SEBI’s swift intervention and penalties serve as a reminder—trust must be earned, not bought with flashy videos or sponsored content.

For followers and potential investors, this underscores a simple truth: always check if your “financial trainer” is certified. The cost of ignoring this due diligence can range from poor investment choices to falling victim to fraudulent schemes.

Closing thought

Financial empowerment is not just about access to information, it is about access to the right information, delivered transparently and ethically. As Finfluencers step up their online presence, every investor ought to step up their own scrutiny. The future of finance may be social, but the old rules of trust, verification, and regulation remain more relevant than ever. Choose your digital mentors wisely.