The Securities and Exchange Board of India (SEBI) has prohibited a popular social media influencer and finfluencer (financial influencer), Mohammad Nasiruddin Ansari, aka “Baap of Chart,” from engaging in security trading. This tends to impact Africa.
Mohammad Nasiruddin Ansari had acquired 172 million rupees (about $2.1 million) from his followers through the advice of stock investments while using the pretext that he was providing educational training. He was accused of misleading customers and investors with claims of minimum monthly returns ranging from 3,000,00 rupees to 6,000,00 rupees, as stated in the article.
In addition to that, he provided direction to those individuals who paid him for ‘live market’ transactions. These acts give rise to worries over the potentially deceptive nature of the advice offered by some influencers and the potential impact that this advice could have on their followers’ investments.
The crackdown that the SEBI carried out underscores the growing apprehensions that people have regarding the conduct of financial influencers who claim to give their followers ideas for effective trading. The activities of the regulator are directed toward protecting investors from the possibility of financial loss caused by unregistered investment analysts and investment advisers.
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The power of influencers in Africa
In this day and age of social media, the culture of influencers has expanded beyond the realms of lifestyle and fashion to permeate the business world. It is impossible to predict the final consequence of each influencer’s efforts, but some of them, like Mohammad Nasiruddin Ansari, are motivated by the desire to further their own personal interests.
This behaviour not only presents ethical considerations, but it also begs the question of whether or not it should be regulated, particularly given that it could lead to market manipulation for the purpose of either causing the stock market values to plunge for personal reasons or gaining personally from the fall in prices.
There is a thin line between expressing one’s right to free expression and providing stock advice for the purpose of one’s own financial gain, despite the fact that social media platforms such as Twitter, now X, are hailed as bulwarks of free expression. The dangers are amplified significantly when the recommendations come from persons who have little to no experience in the financial industry.
The recent crackdown on financial influencers like Mohammad Nasiruddin Ansari by India’s Securities and Exchange Board of India (SEBI) is an example of the growing concerns that are being voiced around the world over these types of influencers.
The most important question that arises at this juncture is whether or not it will be possible to impose comparable punishments on influential figures in the African setting. If we have it right, the Advertising Regulatory Council of Nigeria (ARCON) made an announcement on March 1, 2023, stating that consequences will be levied on influencers, businesses, and skit makers who advertise without receiving pre-exposure permissions.
ARCON has taken this action in response to concerns raised by members of the public over unethical advertising practices and the dissemination of false material on digital and online media platforms. It aims at a wide variety of content providers and influencers, as well as practices in advertising. takes
In the event that compliance is not met, violators will be subject to a fine of N500,000. ARCON makes it clear that it is not regulating social media sites themselves but rather advertising, marketing communications, and marketing advertisements that are distributed across digital platforms.
Steps African financial regulators should take
However, African regulatory organizations must build a thorough framework that outlines influencer roles and obligations to address these challenges, especially for personal marketing.
Protecting investors requires educating the public about the risks of following unregistered finfluencers and increasing openness in their recommendations.
African regulatory agencies and authorities must take numerous actions to fix this:
Framework: Create and implement a comprehensive regulatory framework that outlines finfluencer duties and responsibilities. This framework should register and monitor financial advisors.
Education and Awareness: Inform the people about the risks of following unregistered finfluencers. Encourage investors to check financial advisor credentials.
Establish a strong enforcement framework to investigate and punish unregistered finfluencers who mislead or commit fraud.
Transparency: Encourage finfluencers to reveal financial interests and potential conflicts of interest in their suggestions. Maintaining follower trust requires transparency.
