SEBI sets new rules for intermediary ads on social media

To enhance scam prevention and market transparency, SEBI’s new guidelines require intermediaries to update their contact details on the SEBI SI Portal by April 30, 2025, aiming to strengthen control over digital advertising and curb fraudulent activities

The Securities and Exchange Board of India (SEBI) has introduced a set of guidelines aimed at combating digital scams and protecting investors in the securities market. As part of the new SEBI rules announced on March 21, registered intermediaries will now be required to verify their identities before publishing advertisements on major social media advertising platforms like Google and Meta. This move is part of SEBI’s broader efforts to ensure transparency and safeguard investor interests amidst a rising tide of online financial scams.

The decision comes in response to an increasing number of investment fraud, where fraudsters exploit platforms such as YouTube, Facebook, Instagram, WhatsApp, X (formerly Twitter), Telegram, and the Google Play Store to lure investors with promises of quick, risk-free returns, fake testimonials, and fraudulent trading courses. According to SEBI, these digital scams have grown rapidly, with deceptive advertisements targeting unsuspecting individuals and damaging the credibility of the financial markets.

SEBI strengthens verification for social media ads

SEBI's new rules mandate that all registered intermediaries must register on social media platforms using the same contact details—such as email IDs and mobile numbers—already listed in the SEBI System for Intermediaries (SI) Portal. The platforms, including Google and Meta, will perform verification checks before allowing these entities to post advertisements. This step aims to ensure that only legitimate, verified intermediaries can promote their services, thereby reducing the risk of investment fraud and protecting investors from misleading practices.

The SEBI guidelines come as part of the regulator's ongoing commitment to scam prevention and the maintenance of a fair and transparent securities market. The new rules also require intermediaries to update their contact information on the SEBI SI Portal by April 30, 2025. This initiative is designed to tighten control over digital advertising and curb fraudulent marketing activities that often exploit social media channels.

As digital platforms continue to play a crucial role in reaching potential investors, SEBI’s oversight of social media advertising aims to mitigate the spread of deceptive schemes. With the new SEBI rules in place, regulators hope to ensure a safer investment environment by preventing scams before they can cause widespread damage to the investor community. The move reflects SEBI's efforts to adapt to the growing influence of digital platforms and the increasing need for robust scam prevention measures in the digital age. 

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