- Finfluencers are finding innovative ways to get around the market regulator’s increased scrutiny of unregistered investment advice.
- The finfluencers are running YouTube channels where the ‘buy’ and ‘sell’ calls are disguised in code, setting up companies as a partner of a registered analyst (RA) and more.
- Another way people are planning to escape the regulatory clasp is by setting up companies by partnering with an RA.
Finfluencers are finding innovative ways to get around the market regulator’s increased scrutiny of unregistered investment advice.
Besides renting a registration number, the finfluencers are running YouTube channels where the ‘buy’ and ‘sell’ calls are disguised in code, setting up companies as a partner of registered analysts (RA), and more.
A YouTube channel that has a few lakh followers uses a language that its followers understand.
For example, there is a channel that uses phrases with chai (tea) and phal (fruit). When they say, “Hum chai pee rahe hain” (we are drinking tea), they believe that the index is about to fall. That is a sign that their followers should buy a put. To indicate the strike price, they keep their trading charts open and keep the cursor at the level they believe the index will move.
On the other hand, when they say, “hum phal kha rahe hain” (we are having fruit), they are signaling that the index will go up. Therefore, their followers will know that they should buy a call.
There is another channel that says something like “machli mar gayi” (the fish died), then the followers understand that the price is about to fall. On the other hand, when they say, “murgi kha rahein hain” (we are having chicken), then they are expecting the price to go up.
A person who has been following these social-media channels closely told that the content creators seem to have coached their followers on these phrases a few months ago.
Another way people are planning to escape the regulatory clasp is by setting up companies by partnering with an RA. If any investment advice is given, it has to be given in the name of a registered analyst. Therefore, with this partnership set up, the finfluencers are thinking of giving advice under the company’s name but messaging it differently in their social media channels.
Another influencer had tried a different tactic, by signing up as a marketing manager of an RA. While that looks innocuous–that is, using the reach of one to advertise the services of another–sceptics said that the arrangement would work differently in reality. That is, the advertisement will pull the finfluencers’ followers to the RA’s channel, but the followers will believe that the finfluencers–and not the RA–is giving the advice.
But faced with backlash, the finfluencers seem to have dissolved that ‘marketing partnership’.
(With inputs from agencies
