SEBI seeks expanded powers to curb unauthorised financial advice on social media

New Delhi: The Securities and Exchange Board of India (SEBI) has once again approached the government, seeking broader powers to combat unauthorised financial advice proliferating on social media platforms like WhatsApp and Telegram. 

According to reports, SEBI aims to not only remove misleading financial content but also gain access to call records for investigations into market violations.

This is the second such request by SEBI since 2022, emphasising the urgency and persistence of the issue. 

The push for these powers comes amid an intensified regulatory crackdown on market manipulations and the dissemination of unregulated financial advice, which has become increasingly prevalent through social media channels.

The regulator's letter, dated February 3, highlighted that companies like Meta Platforms' WhatsApp have denied SEBI access to their group chats. 

This refusal is based on the current Information Technology laws, which do not recognise SEBI as an 'authorised agency' for such purposes. 

SEBI's request underscores the limitations it faces in investigating serious market violations without access to what it terms "equivalent of call data records."

SEBI has argued for the same level of investigative access granted to other enforcement agencies such as the Income Tax Department and the Enforcement Directorate, but the government is reportedly evaluating this request with caution. 

The powers to access such records are generally reserved for serious crimes, and any decision to extend these capabilities to SEBI would necessitate a comprehensive policy review.

The regulator has expressed its intent to take down messages, links, and groups on social media platforms if their content violates securities regulations. There are several ongoing investigations into market manipulations like front-running and insider trading, where access to social media communications could be pivotal.

The government's response to SEBI's demand remains pending, with officials indicating that such authority typically requires a broader policy decision affecting all regulators.