Sebi cracks the whip on finfluencers trying to manipulate IPOs
May 24, 2024
Synopsis
The move is meant to restrict the impact of finfluencers in the IPO market and help investors have an easier understanding of key features of an offer. All IPO-bound companies are mandated to make videos informing investors not to rely on finfluencers or financial influencers circulating misinformation on social media platforms.
To restrict the impact of finfluencers in the IPO market, regulator Sebi on Friday ordered all IPO-bound companies to make videos informing investors to not rely on finfluencers or financial influencers dishing out half-baked ideas on social media platforms.
Sebi has issued a circular asking all companies coming out with their IPOs to have audio-visual disclosure saying: “Investors are advised not to rely on any other document, content or information provided in respect to the public issue on the internet/online websites/social media platforms/micro-blogging platforms by finfluencers.”
In the recent past, Sebi has taken action against a number of social media influencers who have been found to have violated rules. Some finfluencers even claim to have a specialisation in the IPO market and are seen giving out calls on which IPOs to apply and which ones to skip.
The order comes into effect from on or after July 1 on a voluntary basis and will be mandatory from October.
"Based on comments received from various stakeholders, it has been decided that salient disclosures made in the Draft Red Herring Prospectus (DRHP), Red Herring Prospectus (RHP) and Price Band Advertisement for public issues shall also be made available in Audio Visual format (AV) for ease in understanding the features of public issues. Such AV shall be prepared and placed in the public domain for all main board public issues," Sebi said in the circular.
The disclosures will be in bilingual format — English and Hindi — with a duration of about 10 minutes.
"The total duration of the AV shall be equitably distributed to cover material disclosures made under various sections of the DRHP and RHP viz. about the company, risk factors, capital structure, objects of the offer, business of the issuer, promoters, management, summary of financial information, litigations, material developments and terms of the offer etc," Sebi said, adding that the content must be factual, non-repetitive, non-promotional and shall not be misleading in any manner.
[The Economic Times]
