Introduction to SEBI’s Battle Against Unauthorised Market Advice
The Securities and Exchange Board of India (SEBI) has been actively working to protect Indian investors from unauthorised market advice. Recently, SEBI froze Rs 546 crore belonging to trading coach Avadhut Sathe and barred him from the securities market. This action has brought attention to the scale of unauthorised market advice in India and the need for regulatory oversight.
Understanding the Issue of Unauthorised Market Advice
Unauthorised market educators have been amassing large followings and collecting significant fees from investors. One such educator collected Rs 601 crore in fees from over three lakh clients without holding an investment adviser licence. This is a clear violation of SEBI’s regulations, which permit only registered advisers to provide buy and sell recommendations, live trading cues, and stop-loss levels.
Behavioural finance research explains why such figures gain traction. When financial decisions become complex, individuals rely on shortcuts — likes, testimonials, follower counts — to assess credibility. On digital platforms, these signals substitute for analytical depth, creating a perception of trust that may not reflect competence.
The Role of Social Media in Spreading Misleading Market Advice
Social media has played a significant role in the spread of misleading market advice. Over 15,000 online content sites spreading misleading market advice were taken down last year. SEBI has also barred several prominent figures from accessing the market, including Mohd Nasiruddin Ansari, who operated under the name “Baap of Chart,” and YouTuber Asmita Jitesh Patel, known online as the “She Wolf.”
SEBI’s interim findings show that Sathe’s academy provided buy and sell recommendations, live trading cues, and stop-loss levels, which are activities permitted only for registered advisers. A single individual had effectively positioned himself as an alternative to India’s formal advisory ecosystem, confirming long-standing regulatory concerns that market influence on social platforms has expanded faster than oversight.
SEBI’s Response to Unauthorised Market Advice
SEBI has intensified its response to unauthorised market advice. The regulator is using technology to flag violations in real time and has strengthened internal expertise to address sophisticated market abuses, including algorithmic manipulation.
In January this year, SEBI issued fresh restrictions barring social-media market educators from offering stock tips as part of its investor protection framework. Claims about assured returns or past performance are prohibited, and the rules extend to advertising, branding, and third-party promotions.
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Regulatory Challenges in Combating Unauthorised Market Advice
India’s regulatory challenge now centres on three clear gaps. First, the line between “education” and “advice” cannot hinge on self-description. Once stock-specific recommendations are provided, advisory regulations must apply, disclaimers notwithstanding.
Second, supervision needs to account for investor outcomes, as global evidence shows that attention-driven trading typically erodes value for late participants. Third, financial literacy must evolve beyond product awareness to information literacy, helping investors recognise conflicts of interest, emotional manipulation, and survivorship bias.
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Conclusion
In conclusion, SEBI’s battle against unauthorised market advice is a critical step in protecting Indian investors. By understanding the issue, the role of social media, and the regulatory challenges, investors can make informed decisions and avoid falling prey to unauthorised market advice.
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