SEBI Social Media Monitoring for Portfolio Managers – New Circular to Tackle Misuse and Fraud
SEBI Social Media Monitoring for Portfolio Managers – New Circular to Tackle Misuse and Fraud
In a significant step to address the growing misuse of social media platforms for fraudulent investment solicitations, the Securities and Exchange Board of India (SEBI) has issued a new master circular mandating enhanced vigilance by portfolio managers.
The circular, dated 16 July 2025, replaces the previous one issued on 7 June 2024, and lays out a comprehensive framework of do’s and don’ts—most notably introducing strict guidelines for social media monitoring by portfolio managers.
Why SEBI Is Cracking Down on Social Media Channels
SEBI has raised the alarm on Telegram groups, WhatsApp circles, and Instagram pages that masquerade as SEBI-registered portfolio managers. These accounts often solicit funds from unsuspecting retail investors, promising unrealistic returns and falsely claiming regulatory approval.
The regulator has now made it clear:
“Portfolio Managers must regularly monitor social media channels to detect and act against impersonators or entities misusing their names.”
This direction follows several complaints where fraudsters duped investors by impersonating genuine SEBI-registered portfolio managers, exploiting the trust built around regulatory credentials.
Portfolio Managers Must Act Swiftly Against Misuse
SEBI’s circular advises prompt action against identified violators, including:
- Issuing public notices or press releases,
- Filing First Information Reports (FIRs),
- Coordinating with law enforcement to stop the misuse of names and credentials.
This approach is aimed at restoring investor trust and ensuring that the industry remains free from unethical practices perpetrated through social media.
“Vigilance and public communication must go hand in hand to protect investor interest,” the circular noted.
Client Funds: Enhanced Responsibility and Segregation Norms
The circular also reiterates the foundational principle of client fund segregation, requiring portfolio managers to:
- Segregate each client’s funds and securities from their own,
- Maintain a dedicated client-wise back office record,
- Refrain from using one client’s funds for another,
- Provide monthly statements to each client with detailed financial data,
- Reconcile client-wise funds daily with the balances in the designated bank accounts.
These instructions are designed to reinforce accountability and transparency in the management of investor assets.
Key Provisions from the SEBI Master Circular (16 July 2025)
| Area of Regulation | New Directive |
|---|---|
| Social Media Monitoring | Regular scanning of Telegram, WhatsApp, Instagram to detect impersonators |
| Action Against Misuse | Public notices, FIRs, and law enforcement action against fraudsters |
| Fund Segregation | Separate records for each client; no inter-client fund usage |
| Reporting & Disclosure | Monthly client statements; daily reconciliation of bank and back office balances |
| Circular Supersession | Replaces previous circular dated 7 June 2024 |
Regulatory Intent: Curbing Digital Misrepresentation
This move underscores SEBI’s broader focus on investor protection in the digital age. With the proliferation of digital finance influencers and Telegram “tip groups,” there is an urgent need to curb unauthorised advisory services that masquerade as legitimate businesses.
“We are witnessing a growing menace of unregulated social media entities engaging in investment solicitation. Portfolio managers must treat this as a compliance priority,” SEBI noted.
How Investors Can Stay Safe
SEBI also urges investors to verify any portfolio manager’s registration status via the SEBI website and avoid dealing with unverified individuals or channels on social media.
Red flags to watch for include:
- Guarantees of “high fixed returns”
- Requests to transfer money via personal UPI accounts
- Lack of disclosure about SEBI registration
- Misuse of company names, logos, and testimonials
Conclusion: Vigilance Is the New Compliance Mandate
The new master circular makes it abundantly clear that SEBI expects portfolio managers to take active ownership of their digital footprint. In an era where impersonation can happen with a simple Telegram username or WhatsApp DP, staying silent is no longer an option.
Portfolio managers must build robust internal processes to monitor, report, and neutralise fraudulent digital activity, thereby safeguarding both their reputation and their clients’ investments.
This is not merely a compliance obligation—it is a shared responsibility to uphold the integrity of India’s capital markets.
Disclaimer:
This article is intended purely for informational purposes. It does not constitute legal, financial, or compliance advice and should not be relied upon as such. Estabizz Fintech endeavors to ensure the accuracy of information at the time of publication, but makes no warranties in this regard.
Estabizz Fintech shall not be held liable for any loss or damage arising from reliance on this material. For personalised advisory support, please connect with our legal and compliance experts.
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