<p>New Delhi: Financial influencers or finfluencers, who share tips and views on a range of financial topics through social media, have significantly reshaped today’s investment landscape. By breaking down intimidating financial jargons into engaging and easy-to-understand content, they have improved financial literacy and encouraged several young investors to venture into stocks and derivatives trading.</p>.<p>However, this digital democratisation of financial information has also exposed investors to greater risks of fraud, misinformation and manipulation.</p>.<p>Take the case of Mumbai-based dentist Pavan (name changed), who subscribed to an algorithmic trading course (which helps understand trading strategies) after a ‘finfluencer’ promised high returns. The platform claimed it could identify profitable options trades and even execute them automatically. In the back-testing, Pavan saw 50% profit and subsequently, he paid Rs 40,000 for the service. But once he joined, the broker’s staff stopped responding to his calls and the system repeatedly hit stop-losses. Within a month, he had lost over Rs 1 lakh.</p>.Young investors dive into markets, blind to big risks.<p>Like Pavan, hundreds of thousands have lost money due to manipulative or half-baked information circulated on social media.</p>.<p>“There are different types of market influencers. Some give objective market analysis and genuine insights. But many are simply out to make money by enticing potential investors into speculation and risky areas like futures and options trading,” said V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited. “Finfluencers should be subject to more regulation,” he added.</p>.<p>Financial influencers often operate in domains overseen by multiple regulators including the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), the Pension Fund Regulatory and Development Authority (PFRDA), and the Insurance Regulatory and Development Authority (IRDA). Under SEBI rules, making explicit or implied claims about returns or performance on any security without the regulator’s approval is illegal. SEBI also prohibits any person or entity from offering stock-specific recommendations or advice, directly or indirectly, without proper registration. Yet most financial influencers are not registered with SEBI and not permitted under any regulation to offer stock market advice.</p>.<p>“Some influencers genuinely try to explain concepts, but many highlight only the exciting parts of trading,” said Ravi Singh, Chief Research Officer at Master Capital Services. “This creates the illusion that anyone can make money in derivatives with a few tricks. That perception drives retail participation. In reality, derivatives require proper knowledge and discipline.”</p>.<p>Prashanth Tapse, Senior VP and Research Analyst at Mehta Equities, also called for stronger and structured regulations for influencers. He suggested that financial influencers be required to obtain National Institute of Securities Markets (NISM)-level certification and register with SEBI to ensure accountability and investor protection.</p>
<p>New Delhi: Financial influencers or finfluencers, who share tips and views on a range of financial topics through social media, have significantly reshaped today’s investment landscape. By breaking down intimidating financial jargons into engaging and easy-to-understand content, they have improved financial literacy and encouraged several young investors to venture into stocks and derivatives trading.</p>.<p>However, this digital democratisation of financial information has also exposed investors to greater risks of fraud, misinformation and manipulation.</p>.<p>Take the case of Mumbai-based dentist Pavan (name changed), who subscribed to an algorithmic trading course (which helps understand trading strategies) after a ‘finfluencer’ promised high returns. The platform claimed it could identify profitable options trades and even execute them automatically. In the back-testing, Pavan saw 50% profit and subsequently, he paid Rs 40,000 for the service. But once he joined, the broker’s staff stopped responding to his calls and the system repeatedly hit stop-losses. Within a month, he had lost over Rs 1 lakh.</p>.Young investors dive into markets, blind to big risks.<p>Like Pavan, hundreds of thousands have lost money due to manipulative or half-baked information circulated on social media.</p>.<p>“There are different types of market influencers. Some give objective market analysis and genuine insights. But many are simply out to make money by enticing potential investors into speculation and risky areas like futures and options trading,” said V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited. “Finfluencers should be subject to more regulation,” he added.</p>.<p>Financial influencers often operate in domains overseen by multiple regulators including the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), the Pension Fund Regulatory and Development Authority (PFRDA), and the Insurance Regulatory and Development Authority (IRDA). Under SEBI rules, making explicit or implied claims about returns or performance on any security without the regulator’s approval is illegal. SEBI also prohibits any person or entity from offering stock-specific recommendations or advice, directly or indirectly, without proper registration. Yet most financial influencers are not registered with SEBI and not permitted under any regulation to offer stock market advice.</p>.<p>“Some influencers genuinely try to explain concepts, but many highlight only the exciting parts of trading,” said Ravi Singh, Chief Research Officer at Master Capital Services. “This creates the illusion that anyone can make money in derivatives with a few tricks. That perception drives retail participation. In reality, derivatives require proper knowledge and discipline.”</p>.<p>Prashanth Tapse, Senior VP and Research Analyst at Mehta Equities, also called for stronger and structured regulations for influencers. He suggested that financial influencers be required to obtain National Institute of Securities Markets (NISM)-level certification and register with SEBI to ensure accountability and investor protection.</p>