What about media ‘finfluencers’?

TV anchors running stock discussion programmes are influential in their own right. Maybe This needs regulatory oversight too

What about media ‘finfluencers’?
Earlier this year, Sebi cracked down on a few market operators for allegedly manipulating stocks through social media.

By Srinath Sridharan

Recently, on the sidelines of an industry conference, a senior official of the Securities and Exchange Board of India (Sebi) indicated that they are working on forming guidelines for ‘finfluencers’. This is critical in the light of the regulator’s observations on the proliferation of various ‘unregistered’ investment advisors giving unsolicited ‘stock’ tips across various social-media platforms, including Telegram, Facebook, YouTube, WhatsApp, and Instagram.

A financial influencer, or ‘finfluencer’, is a person who gives information and advice to investors on financial topics—usually on stock market trading, personal investments like mutual funds and insurance on various social media platforms. Popular finfluencers command sizeable following, often running into millions of views and might be compensated by the business offering the product or service. Earlier this year, Sebi cracked down on a few market operators for allegedly manipulating stocks through social media.

Most millennials and Gen Z-ers use digital and social media sources for information about investing rather than relying on more traditional sources of investing information such as brokerage or investment advisory firms. India’s low financial literacy rate of 27% (National Centre for Financial Education’s 2019 survey) explains the reason why the audience seems all too happy to lap up short videos or listen to gripping narratives from various broadcasters.

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It won’t be easy to clamp down on thousands of financial ‘creators’ who churn out content on a regular basis. There are few precedents globally when it comes to regulatory norms targeting finfluencers.

This can be effective only when the financial regulators have adequacy in terms of the required technological framework for proactive, real-time market surveillance as well as the relvant capabilities. Also, they need in-house talent to assess such data and present this as insights, and then take the necessary consumer protection measures and, importantly, to carry ahead with regulatory provisions to hold offenders accountable in case of breaches.

The missing narrative
“Let’s discuss why stock XYZ will have atleast 40% growth next year.”
“Big investment bet for 2023: stocks or gold or real estate? Here is market veteran ABC’s top investment picks and advice.”

If these statements were made by qualified analysts or those that were registered with the securities regulator to give investment advice, it is understandable. Imagine this coming from a TV anchor. As a viewer, one would be excited to take it as financial advice. As of now, this is not regulated as finfluencer content.

Almost all the Indian business channels offer so-called stock-gyaan. Does one track if those anchors and guest panelists are registered investment advisors? The media programmes should surely carry disclosures about their capability and registration. Many of these so called experts or anchors don’t disclose their own holding in the companies they comment on. Will any of these qualify as running-up to front-running?

Some of these TV anchors who run stock discussion programmes during trading hours are influential in their own right. They have huge fan followings across various mediums including on social media.

And many of them post their channel programmes as tweets and Instagram posts. Don’t they deserve, then, to be brought under the finfluencer tag too? The same argument can be made for those writing about specific companies in print or other digital or social media platforms as well.

Of course, one might claim that they are not getting ‘induced’ by the companies or brands for any specific promotion. Yet, that doesn’t cut it—their media-employer platform might have advertising deal—call it direct advertising or brand promotion or even event-anchoring deals, where the brand pays a contractual amount and some of these “feel good positive news” can get featured by the platform, a few printed articles purportedly written by “experts” can get featured, or the brand’s virtues extolled on air.

The fifth estate
“People having the power to express themselves at scale is a new kind of force in the world—a ‘fifth estate’ alongside the other power structures of society.”
—Mark Zuckerberg’s speech at Georgetown University, 2019

The fifth estate is a socio-cultural reference to groupings of outlier viewpoints, and is associated with bloggers, writers and commentators in the non-mainstream media, especially the social media.

Yet, the media industry has to be regulated in total for the concept of finfluencers. With corporate ownership within the media space increasing further, it needs a look from the financial regulators perspective of ‘influence’ on consumers’ mindset and the impact of any indirect benefit or damage that such “news” could offer to media house/owners.

Each of the traditional media houses also have a strong presence across the digital and social media. If regulations indeed come up only for regulating finfluencers on social media, they would be dangerously flawed, as they would miss those who wield influence over financial ‘edutainment’ on non-social-media like print, TV, etc.

With regulators (the executive) being one of the original four pillars of democracy, can they effectively counter undue influences of one of the other original four pillars—the traditional media? Of course, the fifth estate needs a better regulatory watch.

It is time for the financial regulators to treat the entire media coverage of financial news as that by finfluencers. It is not about ‘will they’. Rather, can they?

The author is Corporate advisor and leadership coach

Twitter : @ssmumbai

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First published on: 03-12-2022 at 04:30 IST