We missed this earlier: The Centre has authorised the Securities and Exchange Board of India (SEBI) to direct social media platforms to remove unlawful stock-related content, a move that reflects the government’s tighter scrutiny of finfluencers and other entities spreading misleading financial information online.
In a notification dated December 8, the Ministry of Finance said SEBI can direct intermediaries, including social media platforms, websites, and digital media outlets, to take down harmful or unlawful content that violates Section 11(1) of the SEBI Act, which pertains to investor protection and the regulation of the securities market.
“In pursuance of clause (b) of sub-section (3) of section 79 of the Information Technology Act, 2000 (21 of 2000) read with clause (d) of sub-rule (1) of rule 3 of the Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules, 2021, the Central Government hereby authorises the Securities and Exchange Board of India, as the authorised agency for the purposes of the said rules in respect of sub-section(1) of section 11 of the Securities and Exchange Board of India Act,1992 (15 of 1992),” the Department of Economic Affairs said.
What it Means
The Centre’s directive implies that SEBI can now order the removal of unlawful stock-related content in the digital space without prior approval from the Ministry of Electronics and Information Technology (MeitY).
The markets regulator can direct platforms such as X (formerly Twitter), YouTube, Instagram, and Facebook, among others, to take down online financial content that is misleading, fraudulent, or manipulates the market. Until now, SEBI could only issue warnings and did not have direct takedown authority.
Clause (d) of sub-rule (1) of rule 3 of the Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules, 2021, states that social media intermediaries hosting, storing, or publishing unlawful content must remove or disable access to that information within 36 hours of receiving an order from the relevant authorities.
While the move is aimed at curbing rising digital fraud in the country, it must be balanced with safeguards to avoid overreach. It remains unclear whether SEBI is required to provide reasoned justifications for such takedown orders, or whether it can direct the removal of content through summary judgments alone.
Finfluencers whose content is ordered to be taken down can file an appeal with the grievance officer appointed by social media intermediaries and lodge complaints with the markets regulator through the SEBI Complaints Redressal System (SCORES).
Intensifying Crackdown Against Finfluencers
This comes on the heels of SEBI’s crackdown against fake finfluencer Avadhut Sathe and his popular training academy, Avadhut Sathe Trading Private Limited, who allegedly duped investors of Rs 546 crore under the guise of “educational courses.”…
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