“Celebrities endorsing pan masala is different because a sachet costs a rupee or two, but influencers advising on financial matters is much more serious because it involves one’s hard-earned money,” is what Anshul Arzare, Jt MD and CEO of YES Securities, had told FE in a recent interview, calling for a complete ban on ‘finfluencers’ and hailing the regulator’s stance in the regard.
The Securities and Exchange Board of India (Sebi) took its first action this week, with its order against prominent finfluencer P R Sundar and his co-promoter, who along with their company Mansun Consultancy paid Rs 46.8 lakh to settle the case with the markets watchdog.
Following the order, Sundar took to Twitter to justify his position.
“People who believe you, need no explanation. People who do not believe you, no amount of explanation will help. So keeping silence, at least for some time, is the best response,” read a tweet by Sundar on Friday, following the order by Sebi directing him and his co-promoter to disgorge over Rs 6 crore in advisory fees charged, inclusive of interest.
Reports say Sundar owns a Jaguar and a Mercedes-Benz S Class. He is also said to own a penthouse worth Rs 30 crore. He has amassed a huge fan following, with over hundreds of thousands of followers on Twitter and over a million subscribers to his YouTube channel.
He also posted a picture with GQuant and First Global founder Shankar Sharma after purchasing a new Rolls-Royce recently, titled “Today a Bull had lunch with a Bear”.
On the other hand, he has often faced backlash for his controversial actions. According to reports, he allegedly posts screenshots of only his profitable positions, and fakes/deletes screenshots when trades go against him. Recently, he was also called out for his malicious remarks against a follower’s daughter during an argument on Twitter.
This move by the regulator seems to have sent others into a tizzy. A Twitter profile ‘Fintwit Decoded’ tweeted about several influencers who moved to delete their earlier tweets and promotional messages on Telegram promising specific returns and investment advice.
Financial influencers, or finfluencers (also referred to as ‘furus’), have arguably become the most polarising figures in finance. While they have an army of followers crediting them with spreading financial literacy and getting more people to the markets, they have also faced a lot of backlash for mis-selling and spreading misinformation for their own benefit.
Markets regulator Sebi has, of late, increased scrutiny on finfluencers, with numerous circulars and guidelines to check the rising instances of unsuspecting investors losing money as a result of pump-and-dump schemes.
Prominent celebrities, too, have been involved in the controversy surrounding ‘furus’. Sebi had, earlier in March, barred 45 entities including actor Arshad Warsi and his wife Maria Goretti from the securities market on charges of alleged manipulation in share prices of Sadhna Broadcast and Sharpline Broadcast via misleading YouTube videos. The celebrity couple had allegedly profited close to Rs 30 lakh and Rs 38 lakh, respectively.
However, Warsi and Goretti were later cleared of all charges by the SAT, which said there was no evidence to prove they were involved in the scheme to push up share prices before duping investors.
Registered Investment Advisers or RIAs — those registered with Sebi — on the other hand, have maintained that they are not worried.
Pranjal Kamra, founder and CEO of Finology and among India’s most followed finfluencers, had in November welcomed the regulator’s intent to crack down on fake finfluencers. “Like any other regulation, this will create an entry barrier. Those on the right side of the law will benefit and the fake ones will be forced to leave,” he had said at the time.
Further, according to a US FTC report of 2022 titled Consumer Protection: Data Spotlight, scams related to investment advice topped the list of reported dollar losses. It said investors had lost to the tune of $770 million owing to fraud initiated on social media.
