The Securities and Exchange Board of India’s order shows how Sathe’s “academy” promoted high-priced courses but functioned as an unregistered advisory service. Live trading sessions, precise buy-sell calls, stop-loss levels and private WhatsApp groups all pointed to actionable advice disguised as training. Sebi concluded that this conduct crossed the line into illegal advisory. It was India’s largest finfluencer crackdown yet, but hardly an isolated case in spirit.

The episode highlights how millions of new retail investors, many young and financially inexperienced, learn about the markets through finfluencers, trading coaches and social-media personalities. The risks are amplified in India, where financial literacy remains low and where aspirational digital culture, luxury lifestyles, “financial freedom,” and screenshots of winning trades blur judgment for a generation facing real income uncertainty.

High exposure, low preparedness

The Reserve Bank of India’s surveys consistently show that a majority of Indian adults lack basic financial knowledge. Among young adults, fewer than one-quarter score well on risk-return trade-offs, diversification or compounding. Yet, this same population is intensely exposed to complex trading content. For gig workers, semi-skilled youth and small-town aspirants, market speculation can feel like an accessible ladder to upward mobility, especially when finfluencers portray it as a reliable “skill” rather than a high-risk activity.

Sebi’s derivatives study in 2024 illustrates the consequences. From FY22 to FY24, 93% of over 10 million individual equity futures and options (F&O) traders suffered net losses, averaging almost ₹2 lakh per person. Most of these traders earned less than ₹5 lakh a year, and 43% were under 30. This study demonstrates how financially vulnerable people are taking disproportionate risks and are influenced by persuasive online voices shared by the finfluencers.

How overseas markets responded

India now confronts what the UK, Australia and the EU faced earlier: social-media-driven retail speculation and unregulated financial promotion.

UK: Content-based rules, criminal penalties

The Financial Conduct Authority’s framework is simple: any online communication that induces investment activity is a financial promotion, irrespective of platform. It must come from, or be approved by, an authorised firm.

In 2024, the FCA charged nine finfluencers with promoting unauthorised schemes on their digital platforms. Action was taken with regulators in five countries, which generated hundreds of takedowns. The outcome has been overt – unlicensed promotion has sharply declined. Influencers increasingly partner with regulated entities to avoid prosecution.

Australia: Licence needed

The Australian Securities & Investments Commission’s rules state that offering opinions on trading strategies or products can constitute financial advice, requiring a licence. Critically, firms can be held jointly liable for influencer misconduct. The outcome was that licensed firms now vet influencers; many high-risk “signal sellers” have withdrawn or toned-down claims.

EU: Disclosure norms

The European Securities and Markets Authority treats online stock tips as potential investment proposals that trigger strict disclosure and conflict-of-interest rules. Misleading content could often attract multi-million-euro fines or criminal charges. The outcome has been that manipulative promotions and pump-and-dump schemes on social media have fallen significantly.

Across these regions, three elements recur: content-based regulation, shared accountability and meaningful penalties. None bans financial discussion, but all require transparency and responsibility.

What India can do

India’s challenge is larger due to scale and literacy gaps. But the global playbook offers models that can be adapted without stifling legitimate education.

1. Go by content, not labels

Like the FCA, India should define financial promotion based on what is said, not what it is called. If an influencer induces trades even in a “webinar” or “course,” the activity should require Sebi registration or pre-approval. This removes the “I’m just educating” loophole.

2. Introduce shared liability

Borrowing from Australia, brokers and registered advisers who use influencers should share legal exposure. This encourages regulated partnerships and discourages shadow advisory networks.

3. Make disclosures mandatory

Influencers offering paid trading content should be required to disclose holdings and planned trades, publish audited performance data, including losses and reveal affiliations and sponsorships. This transparency will naturally filter out unreliable voices.

4. Implement risk warnings

Any derivative-related content, whether by influencers or brokers, should carry a standard label: SEBI data: 93% of individual equity F&O traders incurred net losses from FY22 to FY24. This mirrors EU rules for complex products and counters aspirational marketing with hard numbers.

5. Push for behavioural-finance literacy

Rules alone won’t solve the problem. India needs a youth-focused push on risk, biases, FOMO, leverage and long-term planning. Exchanges, regulators and education boards should integrate behavioural finance into school and college curricula.

Narrow reform window

The Sathe case has given India a moment of clarity. Millions of young investors enter the markets without adequate knowledge and tools to evaluate risk. Finfluencers meet them where they are, on social platforms, but not always with integrity.

The UK, Australia and the EU show that regulation can evolve quickly without suppressing legitimate voices. India has the opportunity to build a modern, tech-neutral, accountability-driven framework that safeguards young investors while allowing credible educators to thrive.

If it succeeds, India could turn a chaotic finfluencer era into a foundation for healthy, transparent retail participation. Its youth deserve no less.

Dr. Jayatu Sen Chaudhury, professor-finance & analytics, Great Lakes Institute of Management, Gurgaon