The infotainment sector is experiencing a surge in popularity, and one genre of content creators, known as financial influencers or finfluencers, has played a significant role in spreading financial literacy and generating interest in the markets. However, alongside their positive impact, finfluencers have also faced criticism for taking advantage of their audience's limited financial knowledge and promoting information for personal gain.

The need for guidelines and regulations surrounding finfluencers has become apparent, considering that their advice often involves individuals' hard-earned money. The Securities and Exchange Board of India (SEBI), the market watchdog, has recently become more vigilant and increased scrutiny of financial influencers following multiple complaints and instances of investors losing money due to fraudulent schemes promoted by these influencers.

The Case of PR Sundar

One prominent case that has come to light involves PR Sundar, a famous financial influencer and options trader. Sundar, along with Mangayarkarasi Sundar, co-promoter of Mansun Consulting, offered investment advice without the necessary registration from SEBI. Through their website, they provided various packages for advisory services, despite not being registered as an investment advisory business. SEBI received numerous complaints regarding their activities and subsequently conducted an investigation. As a result, SEBI imposed a penalty of Rs 6.5 crores and a one-year trading ban on PR Sundar. This marks the first instance of regulatory action taken against a finfluencer. PR Sundar, Mansun Consulting, and Mangayarkarasi Sundar are prohibited from engaging in the purchase, sale, or dealing of securities for one year, as per the settlement order issued by SEBI.

SEBI's Actions and Warning

SEBI's actions have not been limited to PR Sundar alone. Another finfluencer, Gunjan Jain, has also faced action from SEBI, which includes refraining from engaging in securities transactions on behalf of others, refunding fees charged to clients, and paying a penalty of Rs. 1 lakh. In April, Union Finance Minister Nirmala Sitharaman acknowledged the concerns related to financial influencers and warned about the risks associated with Ponzi apps that falsely claim to offer financial solutions. While there is currently no proposal to regulate finfluencers, the need for caution is emphasized.

The Need for Regulatory Measures

Although finfluencers have made significant contributions to the financial sector, it is undeniable that some individuals within this realm have hidden motives or undisclosed considerations. This raises concerns and highlights the necessity of establishing a regulatory body to monitor and regulate their activities. The potential risks involved, such as fraudulent schemes and misinformation, can lead to financial losses for unsuspecting individuals.

The emergence of financial influencers has transformed the way financial information is disseminated and has played a role in enhancing financial literacy among the masses. However, the rise of fraudulent activities and misleading practices among some finfluencers has raised concerns and emphasized the need for regulatory measures. SEBI's recent actions against PR Sundar and Gunjan Jain highlight the seriousness of the issue. While no specific regulations for finfluencers are in place yet, the growing risks demand the attention of relevant authorities to establish guidelines and regulations that can protect investors and ensure transparency within the finfluencer space.

Fin-Influencer PR Sundar Gets Banned For A Year By SEBI