SEC warns influencers, social media users over illegal investment advice

Capital market regulator, the Securities and Exchange Commission (SEC) issued a fresh warning to social media users, cautioning that strict enforcement action will be taken against individuals who misuse the Colombo Stock Exchange (CSE) name or logo, falsely present themselves as stock market authorities, or publish investment recommendations without the required regulatory approval.

In a regulatory notice, the Securities SEC said persons maintaining social media accounts must not use the CSE name or logo, imply that they operate or represent a ‘stock exchange’, or publish investment predictions and recommendations unless such content is issued by a Registered Investment Advisor or a licensed entity.

In the recent months there has been a growing influence of social media platforms in shaping retail investor sentiment and follows increasing regulatory scrutiny of online investment-related content.

The SEC stressed that social media posts that amount to investment recommendations cannot be made without a proper basis and by persons who are not registered or licensed by the regulator.

“Social media content, which tantamount to recommendations should not be made without proper basis and without being a Registered Investment Advisor or a body licensed by the Securities and Exchange Commission of Sri Lanka,” the regulator said.

The SEC said strict action would be taken against individuals who violate laws, rules and regulations governing Sri Lanka’s capital market.

It (SEC) has repeatedly raised concerns over the proliferation of unverified stock tips, market predictions and investment commentary circulating on social media platforms, which have attracted a growing number of retail investors in recent years.

Under Sri Lanka’s securities laws, only authorised and licensed parties are permitted to provide investment advice or make recommendations to investors. The SEC has repeatedly advised the public to verify the credentials of individuals and entities providing investment-related guidance before acting on such information.