Sebi weighs allowing celebrity endorsements for market entities

Mumbai: The Securities and Exchange Board of India (Sebi) on Tuesday proposed several changes to advertising rules for market intermediaries, seeking to replace multiple approval mechanisms with a unified framework that would allow celebrity endorsements at the brand level and shift most advertisements to a post-issuance reporting regime.

The proposed common advertisement code (CAC) would apply to stock brokers, mutual funds, investment advisers, research analysts, portfolio managers, online bond platform providers and depository participants, among others.

"In this digital era, regulated entities publish dozens of social media posts, educational reels and promotional content pieces daily. Subjecting each item to prior approval is neither efficient nor effective. Delays associated with obtaining prior approval may also erode the topical relevance of advertisements with time-sensitive content and may render them ineffective. Notably, mutual funds operate under a post-issuance reporting model," Sebi said in a consultation paper.


The regulator has proposed permitting celebrity endorsements for financial entities at the brand level. Celebrities, however, would not be allowed to endorse specific investment products or services. Such advertisements would continue to require prior approval from supervisory bodies.

"In today's time, a complete prohibition on celebrity endorsements may not be appropriate, considering such endorsements are a legitimate and widely used means of brand-building in various industries, including those in the financial sector," Sebi said.

"While a brand endorsement merely reflects a general association with the entity, endorsement of a particular product or service may unduly influence investors' decisions by creating perceptions regarding its suitability or expected outcomes," it said.