‘MFDs should refrain from talking about scheme performance on social media’

One of our readers wrote to us with this query:

Hi Team Cafemutual,

I recently went through one of your articles on SEBI regulations on finfluencers in which the market regulator has directed the market intermediaries which include mutual fund companies and their distributors and registered investment advisors not to engage with finfluencers directly or indirectly.

I am very active on Instagram and YouTube and put a lot content on social media. I would like to understand what are the guidelines for an MFD? Can MFDs continue to post content on Instagram and YouTube?

Name withheld on request

Dear Distributor,

Thanks for writing to us.

While the detailed guidelines are yet to be published by SEBI, there has been certain restrictions to registered intermediaries like fund houses and their distributors like you and registered investment advisors.

SEBI defines finfluencer as a person who provides unsolicited advice or recommendation or makes any implicit or explicit claim of returns and performance with respect to security market products. However, SEBI has clarified that such a restriction will not be applicable for persons who are engaged in investor education and do not directly or indirectly provide advice.

Clearly, MFDs should refrain from talking about fund performance and returns on their social media handles.

Since distributors can give incidental advice and are governed by the AMFI code of conduct, the new SEBI directive can be read by combining both SEBI guidelines on finfluencers and AMFI code of conduct. Based on our reading, here are some points that you should keep in mind:

• MFDs can continue to run their social media channels provided they do not talk about returns or performance of schemes
• MFDs can post educational content on their social media handles to spread awareness about mutual funds
• MFDs should not make any false or defamatory statement about AMC, AMFI, other MFDs and MF schemes
• MFDs should maintain professional decorum and should not participate in transmitting untrue statement or rumours
• MFDs should use social media responsibly with respect to content standards and authenticity
• MFDs should always use a tagline – AMFI registered Mutual Fund Distributor in all communication

Hope  we have addressed your query.

Please note that we have made these pointers based on our interpretation of the current regulations.

Regards

Team Cafemutual