Social media offers significant opportunities for portfolio managers to build their practice, but it also presents substantial compliance risks. This article provides a compliance-safe framework for using social media.
The Regulatory Framework
SEBI's Approach
SEBI has proposed that AMCs, RIAs, and PMS/AIF players prominently display their registered name and registration number on the home page of their social media profiles. This aims to curb fraud on social media platforms and enhance transparency.
Content Standards
Regulated entities and agents will be prohibited from posting:
- Any promise of guaranteed or assured returns
- False, misleading, biased, or exaggerated claims
- Content that exploits investors' lack of knowledge
What is Permitted on Social Media
Educational Content
- Educational posts about investment concepts
- General market commentary
- Economic analysis
- Industry insights
Professional Branding
- Displaying registration status
- Sharing professional achievements
- Announcing events and webinars
- Engaging with industry peers
Client Communication
- Responding to client queries
- Sharing general updates
- Announcing new services
What is Prohibited on Social Media
Guaranteed Returns
Any promise of guaranteed or assured returns is strictly prohibited.
Misleading Claims
False, misleading, biased, or exaggerated claims are prohibited.
Exploitative Content
Content that exploits investors' lack of knowledge is prohibited.
Specific Recommendations
Making specific buy/sell recommendations on social media without proper disclosures is prohibited.
Compliance-Safe Social Media Framework
Profile Requirements
- Display registered name as per SEBI registration
- Display SEBI registration number on home page
- Include appropriate disclaimers
- Link to website with full disclosures
Content Guidelines
- Focus on educational content
- Avoid specific recommendations
- Include required disclaimers
- Maintain professional tone
Record Keeping
- Maintain records of social media content
- Maintain records of engagement
- Retain for five years
Monitoring
- Regularly monitor social media presence
- Respond promptly to queries
- Address any compliance issues
Brand Name vs Registered Name
Display Requirements
The registered name and registration number must be prominently displayed on social media profiles. Brand names may be used in addition to, but not instead of, the registered name.
Purpose
This requirement helps investors identify legitimate registered entities and avoid fraud.
Recent Proposals
Social Media Display Proposal
SEBI has proposed that regulated entities prominently display their registered name and registration number on the home page of their social media profiles.
Agent Content Standards
Regulated entities and agents will be prohibited from posting content that is false, misleading, biased, or likely to misguide investors.
Expert Legal Guidance
Anuj Desai & Associates provides expert legal advisory services on social media compliance for portfolio managers. Our securities law experts help clients develop compliant social media policies, review content, and ensure regulatory compliance. Contact us for guidance on social media and other regulatory matters.