Copyright republicworld
SEBI Chairman Shri Tuhin Kanta Pandey, on November 4, 2025, Tuesday, issued a stern directive to stock brokers and other regulated entities: immediately disassociate from unregistered financial influencers who make unverified promises of returns or market performance.The warning came during his keynote address at the Morningstar Investment Conference India 2025, where he laid out a sweeping vision for tougher investor safeguards in a digital-first market.“Regulated entities have been mandated to disassociate from unregulated entities, which provide recommendations or unverified claims on return and performance,” Pandey stated, leaving no room for ambiguity.Pandey highlighted the rising risks associated with the modern, high-speed and interconnected marketplace, including cyber vulnerabilities and the challenge of misleading content.He underscored that investor trust is foundational, cautioning, "If investor trust is exploited, the market will suffer from lower liquidity, higher costs and ultimately slower growth."The SEBI Chairman pointed to the market regulator's proactive steps to combat misinformation and manipulation. This includes "Active monitoring of social media platforms to detect and curb misleading, manipulative, or illegal market-related content and unregistered financial influencers."In a tangible display of enforcement, he shared that SEBI has already "escalated of over 1 lakh misleading contents to major social media platforms (Google, Meta, X, Telegram, etc.) for appropriate action."Pandey stressed that financial intermediaries such as banks, investment firms, mutual funds and brokers are "far more than conduits" and sit at the "junction" of investor protection and market integrity. He clearly defined what these principles mean in practice for the investor:Investor Protection means the investor receives "timely, accurate, understandable information," their assets are held securely and the intermediary "acts in the interest of the investor, avoiding unfair practices or conflicts."Market Integrity means "Transparent, fair, orderly transactions — no hidden costs, no preferential access, no manipulation." It also demands "strong internal controls, sound governance and audit trails."Chairman Pandey emphasised that financial firms shouldn't treat compliance as the end goal, but rather as the "foundation" for building investor trust. He highlighted five crucial areas where intermediaries must take definitive action:Client Fairness: This involves ensuring complete "transparency in dealings, transaction execution and pay-outs." Essentially, every step of the client's journey should be clear and honest.Disclosure and Due Diligence: When offering new financial products, firms are mandated to provide clear disclosures detailing "underlying risks, costs and business model assumptions." Furthermore, intermediaries must perform "robust due diligence" to make sure the product perfectly matches the client's risk appetite.Asset Custody and Operational Resilience: Keeping client assets safe is paramount. This requires maintaining "strong back-office controls, cyber-resilience and contingency planning" so that client investments are secure even when the institution faces difficulties.Grievance Resolution and Accountability: When things go wrong, the focus must shift to how quickly and effectively the issue is resolved. The Chairman noted that "the speed, transparency and quality of the remedy matter more than the mistake itself."Culture, Ethics and Governance: This is the invisible bedrock of trust. He called culture "the invisible infrastructure that ultimately underwrites investor trust." It includes looking closely at how sales staff are incentivised and ensuring that whistle-blower channels are respected and functional.Pandey also outlined several new rules and technological upgrades designed to reinforce the entire financial ecosystem:Tackling Cyber Fraud: SEBI introduced the "SEBI Check" facility, which uses “Validated UPI Handles” to help prevent cyber fraud during transactions.Preventing Asset Misuse: To guarantee security, there is now a mandate for the direct pay-out of securities and funds into clients’ own demat/bank accounts.Tracking Investments: SEBI launched the MITRA platform specifically to help investors locate and track inactive mutual fund folios, thereby reducing the risk of fraud.Faster Complaints: The SEBI Complaint Redress System (SCORES) is being revamped to provide a more "efficient" process with significantly reduced timelines for resolution.SEBI’s forward-looking strategy includes ongoing efforts to simplify and rationalise rules, notably by reviewing the SEBI (Stock Brokers) Regulations, 1992, all with the ultimate goal of fostering a market that is "fair, transparent and resilient."Pandey concluded by urging all market institutions to lead "in governance, in innovation, in culture and in collaboration," stating, "When our financial institutions lead with integrity, markets follow and when markets follow, the economy thrives."
