Investment Advisors (IAs) will now need to report details about their social media presence twice a year to a supervisory body appointed by the market regulator.

The advisors will need to declare their presence on Facebook, X (Twitter) and other social media platforms, and disclose their account, page, channel or other details, according to a circular issued by the Securities and Exchange Board of India (Sebi) on May 7.

Anand Kankani, a practising company secretary who counsels investment advisors and research analysts, told Moneycontrol that this is a new requirement put forward by Sebi and it will make it easier for the supervisory body to track the IA's online activities.

"Even earlier Sebi had jurisdiction over the registered entity's online activities but now, with the regulator explicitly asking for the details, it will become easier to track these activities even during routine checks. Also, if the IA does not declare a social-media handle, it will invite regulatory action now."

The Sebi circular requires these details to be reported to the Investment Advisers Administration and Supervisory Body (IAASB), which has been recognised by Sebi. Reporting will need to be done on a half-yearly basis on September 30 and March 31 of every financial year.

The Sebi circular said, "Under the formation of Industry Standards Forum (“ISF”) for IAs, ISF has discussed the development of a standardized format for periodic reporting for IAs and has provided its recommendations to SEBI in this regard."

It added, "Based on the recommendations received from ISF, a standardized periodic reporting format for submission of information by IAs about their activities periodically has been prepared."

Besides social media presence, the period reporting format will capture details such as "bank accounts that have been set up for receiving advisory fee, trade or brand names, address details, number of branches, the shareholding pattern that must have details of shareholders with 10% or more holding, details of advertisements issued, and number of complaints received, pending and resolved."

Bank account details are particularly important in case the IA is found in violation of regulations while servicing clients, as the regulator can then impound illegal gains arising from advisory fees. Otherwise, market participants believe the IA can claim the amount has come from friends or relatives or is income from other sources.

Article Sources – SEBI Circular, MoneyControl