India's markets regulator is currently seeking expanded authority from the government to eliminate unauthorized financial advice on social media platforms, like WhatsApp and Telegram, and to have access to call records for investigating market violations, as revealed by a government source and a reviewed document from Reuters.
This marks the second time, since 2022, that the Securities and Exchange Board of India (SEBI) has requested such powers, with government approval still pending. The regulator has intensified efforts to investigate market violations and crack down on unregulated financial advice circulating on social media. Despite a prior meeting with the regulator, social media companies have not complied with the government's request to access their call data records, groups, and channels.
In their most recent correspondence sent last week, SEBI highlighted that companies like WhatsApp, owned by Meta Platforms, have refused access to their social media group chats as the current information technology law does not recognize the capital markets watchdog as an 'authorized agency.' SEBI is seeking authority to remove any content violating securities regulations on social media channels and access communication records on digital or social media platforms.
SEBI seeks to address limitations in investigating serious market violations due to the lack of power to access equivalent call data records, while such powers currently remain with other law enforcement agencies, not regulators.
Ongoing investigations on market manipulations like front running and insider trading necessitate access to records from these social media groups, as popular WhatsApp groups and Telegram channels are used by financial influencers for sharing trading tips for monetary gains.
SEBI Chairperson Madhabi Puri Buch previously requested more powers to access information among suspects involved in offenses like insider trading through digital resources in August 2022. The government did not grant these powers but arranged a meeting with SEBI and Meta Platforms representatives to provide necessary information for ongoing investigations.
Although the government is evaluating SEBI's recent request, such authorities are typically reserved for serious crimes, requiring broader policy considerations for all regulators. Unlike in developed countries such as those in Europe and the U.S., securities regulators do not possess direct authority to remove social media content. However, they have the ability to penalize individuals engaged in fraudulent or misleading activities.