SEBI Tightens Grip on Financial Ads: Social Media Advertisers Must Verify Identity

On Friday, the Securities and Exchange Board of India (SEBI), the country’s market regulator, issued a directive requiring all SEBI-registered intermediaries to follow a new verification process when advertising on social media platforms such as Google and Meta. According to this directive, any intermediary posting or publishing advertisements on these platforms must ensure that they register using the same email IDs and mobile numbers that are recorded in SEBI’s SI Portal.

This move is aimed at enhancing transparency and accountability in financial advertisements, ensuring that only verified entities promote investment-related content. By linking advertisements to officially registered contact details, SEBI seeks to curb misleading promotions and prevent fraudulent investment schemes that could mislead investors. The regulator’s decision comes as part of its broader efforts to strengthen investor protection and maintain the integrity of financial markets in the digital advertising space.

Social media platform providers, such as Google and Meta, will be responsible for conducting the verification process for SEBI-registered intermediaries before allowing them to publish or upload advertisements. This means that only those intermediaries who have successfully completed the verification process will be permitted to run advertisements on these platforms.

To comply with this directive, all SEBI-registered intermediaries intending to advertise on these social media platforms must ensure that their contact details are up to date in SEBI’s intermediary database on the SI Portal. The regulator has set a deadline of April 30, 2025, for intermediaries to update their registered email IDs and mobile numbers in the system. This requirement is part of SEBI’s broader effort to bring more accountability and transparency to financial advertising, helping to safeguard investors from misleading or fraudulent promotions.

In an advisory issued to investors, the Securities and Exchange Board of India (SEBI) has raised concerns over a significant rise in fraudulent activities related to the securities market on various social media platforms. The regulator has observed that fraudsters are using these platforms to lure unsuspecting individuals by making enticing offers under the pretense of providing financial education and investment-related services.

These fraudulent schemes often take the form of online trading courses, investment seminars, or so-called expert guidance, where perpetrators use misleading testimonials and exaggerated claims to create a false sense of credibility. In some cases, they even promise guaranteed or risk-free returns to attract potential victims. SEBI’s advisory serves as a warning to investors, urging them to remain cautious and avoid falling prey to such deceptive practices that could lead to financial losses.

The social media platforms where these fraudulent activities have been observed include YouTube, Facebook, Instagram, WhatsApp, X (formerly Twitter), Telegram, Google Play Store, Apple App Store, and other similar digital platforms. SEBI has identified these platforms as mediums where misleading investment-related promotions and deceptive schemes are being circulated, potentially putting investors at risk.

In response to the growing concerns about financial fraud in the digital space, SEBI has been actively implementing measures to educate and protect investors. As part of its ongoing efforts, the regulator recently issued a cautionary advisory regarding certain electronic platforms and websites that facilitate transactions in unlisted securities of public limited companies. SEBI warned investors about the risks associated with engaging in such transactions and recommended that they exercise due diligence before dealing with these entities. This advisory aligns with SEBI’s broader mission to enhance investor awareness and curb unauthorized financial activities in the digital domain.

SEBI has clarified that any interaction or transaction with unregulated entities operating in the securities market is considered a violation of its regulatory framework. The market regulator emphasized that entities not registered or regulated under SEBI’s guidelines are not authorized to offer investment-related services or facilitate securities transactions. Engaging with such unregulated platforms, whether for trading, investing, or other financial activities, goes against SEBI’s established rules and regulations.

This warning serves as a reminder to investors and market participants to ensure that they only deal with SEBI-registered entities that comply with regulatory standards. By doing so, investors can protect themselves from potential financial risks associated with unauthorized platforms that operate outside the legal purview of SEBI’s oversight.

In a press release issued in December, the Securities and Exchange Board of India (SEBI) strongly advised investors against engaging in any financial transactions through unauthorized electronic platforms. The regulator cautioned that these platforms are neither recognized nor regulated by SEBI, making them potentially unsafe for investors.

SEBI also warned investors about the risks of sharing sensitive personal or financial information on such platforms. Since these entities operate outside SEBI’s regulatory framework, there is no oversight to ensure the security of users’ data or the legitimacy of their financial dealings. The advisory serves as a precautionary measure, urging investors to remain vigilant and to conduct transactions only through SEBI-registered and regulated entities to safeguard their interests.

In addition to SEBI’s efforts, leading stock exchanges such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) have also been actively cautioning investors about the presence of fraudulent elements in the financial market. These exchanges have been issuing regular warnings, advising investors to stay alert and exercise caution when dealing with investment opportunities promoted through unverified sources.

The exchanges have emphasized the importance of conducting thorough due diligence before engaging with any financial service provider. Their warnings serve as a reminder that fraudulent schemes often disguise themselves as legitimate investment opportunities, making it crucial for investors to verify the authenticity of any platform or entity before making financial commitments.

In addition to SEBI’s efforts, leading stock exchanges such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) have also been actively cautioning investors about the presence of fraudulent elements in the financial market. These exchanges have been issuing regular warnings, advising investors to stay alert and exercise caution when dealing with investment opportunities promoted through unverified sources.

The exchanges have emphasized the importance of conducting thorough due diligence before engaging with any financial service provider. Their warnings serve as a reminder that fraudulent schemes often disguise themselves as legitimate investment opportunities, making it crucial for investors to verify the authenticity of any platform or entity before making financial commitments.