Influence of Social Media on Investment Decisions: A Critical Analysis of Finfluencers and Sebi’s Regulatory Framework

This paper undertakes a doctrinal and analytical examination of the impact of social media–driven financial intermediation on investor behaviour and market integrity. The proliferation of digital platforms such as Instagram, YouTube, Twitter (X), and Reddit has facilitated the emergence of “finfluencers” as informal, unregulated channels of investment advice, thereby disintermediating traditional financial advisory frameworks. While such platforms contribute to financial inclusion, information diffusion, and increased retail market participation, they simultaneously exacerbate concerns relating to information asymmetry, herd behaviour, conflict of interest, and susceptibility to market manipulation. The study critically evaluates the adequacy of the existing regulatory architecture under the Securities and Exchange Board of India (SEBI), particularly in the context of unregistered investment advisory activities, misleading digital promotions, and enforcement limitations in algorithm-driven and cross-platform ecosystems. It further analyses enforcement actions and regulatory responses in light of manipulative practices, including pump-and-dump schemes, with reference to the Sadhna Broadcast case, and situates the discussion within a comparative global framework through the GameStop short squeeze episode. The paper argues for a recalibrated regulatory approach incorporating platform accountability, mandatory disclosure norms, and stricter compliance mechanisms for digital financial content creators. It concludes that ensuring investor protection in the digital age necessitates a harmonised framework balancing innovation, market efficiency, and robust legal oversight.