Caveat emptor, of online fibfluencers

Far too many retail investors are in thrall of disingenuous finfluencers, many of snake-oil salesmen proportions. This, despite a series of steps taken by Sebi to curb unauthorised - and fraudulent - investment advice. The pool of financial advice floating around on social media is largely unfiltered, where motives remain uncertain. Admittedly, scale of the problem is magnified by low financial literacy, which needs a bigger effort to counteract than sellers of online tips. Sebi has created moats around information and advice. But their efficacy is presupposed on audience discretion, which has been inadequate in a predominantly bull market. The regulator is also up against low internet literacy that fails to calibrate the content being consumed on social media. A young investor community has little experience of market turbulence while older, and hopefully more prudent, investors appear unaware of social media guard rails.

Regulatory response has been to counter misinformation with credible information. Sebi has limited options when it comes to distribution of dodgy advice, which should involve content moderation by social media platforms. Fragmenting content consumption behaviour and divergence over moderation policies makes the process even more complex. Larger social media platforms are fairly sensitised to misinformation about health and money, but their content-scrubbing machine may not be good enough. This calls for closer coordination with regulators to create and enforce protocols. It becomes even more urgent when AI has the capacity to magnify scale and reach of synthetic content, some of which will be directed at gullible investors.

Sebi has been fairly successful in purging misinformation through its regulated entities through disclosures. It could work with social media platforms to inform viewers about the accountability they are entitled to over investment information. Since such codes apply in advertising, it may be possible to graft them to content generated by influencers.