The Securities and Exchange Board of India (SEBI) is reportedly seeking expanded authority to combat unauthorized financial advice on social media platforms such as WhatsApp and Telegram. According to a report by news agency Reuters, SEBI is seeking broader powers from the government to remove unauthorised financial advice from social media platforms such as WhatsApp and Telegram, and to access their call records for investigations into market violations.
This marks SEBI’s second request since the year 2022 for such powers, with government approval still pending. In a letter dated February 3, SEBI highlighted that platforms like WhatsApp, owned by Meta Platforms, have denied the regulator access to group chats, citing current information technology laws that do not recognize SEBI as an ‘authorized agency.’ The regulator is requesting the ability to remove messages, information, links, and groups that violate securities regulations, as well as access to call and message data records from digital platforms.
Currently, such powers are granted to other law enforcement agencies, including the Tax Department and the Enforcement Directorate, but not to regulators like SEBI. The government is reviewing SEBI’s request, noting that such authority is typically reserved for serious crimes and would require a broader policy decision for all regulators.
This move comes amid SEBI’s intensified efforts to investigate market violations and curb unregulated financial advice circulating on social media. Platforms like WhatsApp and Telegram have become popular among market participants, with financial influencers sharing trading tips on specific stocks and securities in exchange for money.
In August 2022, SEBI Chairperson Madhabi Puri Buch made a similar request for more powers to access information exchanges among suspects involved in offenses such as insider trading through digital resources. The government did not grant those powers but … with representatives from Meta Platforms to direct them to provide relevant information for ongoing investigations.
Developed countries such as those in Europe and the US reportedly do not grant direct authority to their securities regulators to remove social media posts. However, they have the capacity to penalise individuals engaged in illegal activities, such as fraud and misleading advertising.