SEBI Said to be Seeking Greater Access to Social Media Records

SEBI Seeks Expanded Powers to Combat Unregulated Financial Advice on Social Media

India’s market regulator, SEBI (Securities and Exchange Board of India), is pushing for broader powers to fight unregulated financial advice circulating on social media platforms like WhatsApp and Telegram. This request, which is the second of its kind since 2022, seeks government approval to take down illegal content and access private communications to investigate market violations.

SEBI’s Request for New Powers

In a letter sent earlier this month, SEBI requested authority to remove messages, groups, and links on social media platforms if they violate securities regulations. The regulator also asked for the ability to access call and message data records on these platforms during investigations. Currently, such powers are available to agencies like the Tax Department and Enforcement Directorate, but not to SEBI.

This move comes as SEBI intensifies its focus on market violations, including insider trading and market manipulation. The regulator’s efforts have been hindered by its lack of authority to access social media communication records, which has made investigating complex market manipulations challenging.

Telegram and WhatsApp’s Response

Social media platforms have responded differently to SEBI’s requests. Telegram, in a statement, confirmed that it is cooperating with SEBI on content moderation requests. However, the platform clarified that it cannot provide access to call data due to its technical structure.

WhatsApp, owned by Meta, has reportedly denied access to its group chats, citing the fact that the current information technology law does not recognize SEBI as an “authorised agency.” This has complicated SEBI’s efforts to investigate illegal market activity on these popular platforms, where financial influencers frequently share trading tips.

The Growing Concern of Unregulated Financial Advice

WhatsApp and Telegram have become hotspots for market participants looking for trading advice, often for a fee. These platforms host numerous groups and channels where influencers promote specific stocks, promising financial gains. While some of this content may be harmless, much of it involves illegal practices like front-running, a form of insider trading where individuals exploit non-public information to make profits.

SEBI’s increased scrutiny of these platforms is part of a broader effort to regulate the growing problem of unlicensed financial advice. These social media groups have become powerful tools for spreading both legitimate and misleading information about financial markets, making it harder for regulators to track market manipulation.

SEBI’s Previous Request and the Government’s Role

This isn’t the first time SEBI has requested expanded powers. In 2022, SEBI Chairperson Madhabi Puri Buch sought similar permissions from the government to access digital communications involved in market offences. While that request was not granted, the government did convene meetings between SEBI, Meta, and other stakeholders to address these concerns.

The Indian government is currently reviewing SEBI’s latest request. However, officials have indicated that such powers are typically granted only for serious crimes. Any decision to grant these powers would require a broader policy shift and may involve careful deliberation.

Global Context: What Other Countries Are Doing

In developed countries like the United States and in Europe, securities regulators do not have direct authority to remove posts from social media. However, they do have the power to penalize individuals engaged in illegal activities like fraud or misleading financial advice. These global standards highlight the delicate balance between regulating financial markets and respecting privacy rights.

What’s Next for SEBI and Social Media Platforms?

As SEBI continues to push for more authority, the question remains: will the government grant these new powers? If it does, social media platforms could face greater regulatory scrutiny, forcing them to cooperate more closely with Indian authorities.

For now, SEBI’s efforts are focused on making sure the public has access to safe and regulated financial advice. If granted the necessary powers, SEBI could take significant steps toward cleaning up the digital space where market violations often occur.

Your Thoughts?

What do you think about SEBI’s push for broader powers? Do you believe social media platforms should be more accountable for the financial advice shared on their channels? Share your thoughts in the comments below, and stay tuned for updates as the government reviews this important request.