How SEBI’s takedown powers could curb online investment misinformation

For decades, Indian securities regulation has largely lived in a familiar world of trading floors, compliance filings, insider-trading probes and enforcement actions that unfold slowly, sometimes over years. That world still exists. But the way investors discover ideas, form opinions and make decisions has changed far more quickly than the law ever expected.

Today, market “advice” rarely waits for formal reports or registered experts. It pops up where people already spend their time – in short reels promising quick gains, Telegram groups buzzing with stock tips, WhatsApp forwards from “trusted” contacts and YouTube livestreams breaking down trades in real time. This content travels fast and wide, often reaching thousands before anyone pauses to ask basic questions like:

• Who is giving this advice?
• Are they qualified?
• Are they accountable if things go wrong?

More often than not, those answers are unclear, leaving investors to navigate a space where influence is high, but responsibility is thin.

In this backdrop, the notification dated 8th December 2025, issued by the Ministry of Finance, takes on real significance. Through this notification, the Central Government has authorised the Securities and Exchange Board of India (“SEBI”) as an “authorised agency” under the Information Technology Act, 2000 (“IT Act”). In simple terms, this allows SEBI to directly trigger content takedown obligations under India’s intermediary liability framework.

On the face of it, the notification is just a short paragraph of delegated power. But its impact goes well beyond its length. It gives SEBI a way to step into the digital space where much of today’s market influence actually happens and to respond to online misconduct not months later, but in real time, at the speed the internet demands.

The legal background behind the move

Section 79[1] of the IT Act provides conditional immunity or “safe harbour” to online intermediaries for third-party content hosted on their platforms. This immunity is not absolute. It comes with obligations. One of the most critical is that intermediaries must remove or disable access to unlawful content once they receive “actual knowledge” through a lawful order or notification from an authorised government agency.

The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“Rules”) further operationalise this framework. Rule 3(1)(d)[2] specifically requires intermediaries to act upon directions issued by government-authorised agencies.

What the December 2025 notification does is slot SEBI into this framework. By authorising SEBI for the purposes of Section 79(3)(b)[3] of the IT Act, read with the Rules, the government has empowered the securities regulator to directly notify intermediaries about content that violates securities laws or undermines investor protection.

This authority flows from SEBI’s core mandate under Section 11(1)[4] of the SEBI Act, 1992 which obligates it to protect the interests of investors and regulate the securities market.

Why this power matters?

Every minute a huge amount of information is put online. It is not possible for any website to check everything that people post send or share before it appears online. That is why online platforms like Facebook or Twitter are not usually held responsible in India for what the users of online platforms post on their sites. As long as online platforms are only allowing people to share content on the websites of online platforms, the law in India protects them to a certain extent.

The protection that these platforms have is not absolute. When a platform is officially informed that some content is against the law, the platform must remove the content or stop people from seeing it. The Rules of 2021 also explain who can report content on the internet and further, impose obligations on the online platforms to pay attention when they are informed about any misconduct.

But market misconduct spreads quickly through things like posts on the internet videos, groups of people talking and messages that get forwarded to others. It does not wait for people to officially inform the authorities about its early signs. Therefore, the current notification of the Finance Ministry empowers the SEBI to take prompt action in case of market misconduct.

This authorisation basically lets SEBI sit with the platforms. If SEBI sees something that is not true and can hurt investors or is against the law, it does not have to wait for a long time to take action. It can now directly tell the platforms to do something about it.

This is not about giving SEBI new powers out of thin air. Protecting investors has always been its job. The difference is that SEBI now has a way to respond in real time before the damage has already been done. In a market where influence travels faster than investigations, this shift is expected to make a real change.

What kind of content is likely to be impacted?

While the notification itself does not list categories of content, SEBI’s statutory functions under SEBI (Investment Advisers) Regulations, 2013 may offer clear guidance.

Content that could attract takedown directions may include:

• unregistered investment advisory services operating through social media or messaging platforms [Regulation 3(1)],
• false or misleading claims about securities, returns, or regulatory approvals [Regulation 13(b)],
• impersonation of registered market intermediaries [Regulation 15(1)],
• coordinated dissemination of market-manipulative information [Regulation 23],
• digital promotions that violate disclosure and advertising norms under securities law [Regulation 18(6)].

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Importantly, this power is not limited to large platforms alone. Any intermediary, whether a social media platform, content-hosting service or digital publisher, may be required to act once it receives a valid direction from SEBI.

Implications for Platforms, Fintechs and Content Creators

For social media platforms, this change means they have to deal with more requests to remove things from their sites and they need to make sure their systems take action right away upon SEBI directions, just like they would with orders from the police or other authorities that have the power to make these requests.

For fintech companies, brokerage platforms and registered intermediaries, this means they have to be more careful about the content they share on their social media handles and the content that is shared by people who are paid to promote them.

For finfluencers and online advisors also, the message is clear. Just because you access online media, it does not mean you do not have to follow the law.

A modest notification having far-reaching implication

The notification does not impose any immediate compliance obligation, but it changes the balance between how the market is controlled and how digital platforms are governed. SEBI’s inclusion in the framework governing intermediary accountability signifies a broader regulatory intent to align digital conduct with securities market integrity. For businesses, platforms, and market participants, it is a clear signal to reassess digital strategies now, before regulatory enforcement moves from a back-end approach to a front-end intervention.

To remain updated with the further development on this, please get in touch with us.

Author: Dwaipayan Das

Co-Author: Amiya Mukherjee

Disclaimer

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[1] Section 79. Exemption from liability of intermediary in certain cases.–

(1) Notwithstanding anything contained in any law for the time being in force but subject to the provisions of sub-sections (2) and (3), an intermediary shall not be liable for any third party information, data, or communication link made available or hosted by him.

(2) The provisions of sub-section (1) shall apply if–

(a) the function of the intermediary is limited to providing access to a communication system over which information made available by third parties is transmitted or temporarily stored or hosted; or

(b) the intermediary does not–

(i) initiate the transmission,

(ii) select the receiver of the transmission, and

(iii) select or modify the information contained in the transmission;

(c) the intermediary observes due diligence while discharging his duties under this Act and also observes such other guidelines as the Central Government may prescribe in this behalf.

(3) The provisions of sub-section (1) shall not apply if–

(a) the intermediary has conspired or abetted or aided or induced, whether by threats or promise or otherwise in the commission of the unlawful act;

(b) upon receiving actual knowledge, or on being notified by the appropriate Government or its agency that any information, data or communication link residing in or connected to a computer resource controlled by the intermediary is being used to commit the unlawful act, the intermediary fails to expeditiously remove or disable access to that material on that resource without vitiating the evidence in any manner.

Explanation: For the purposes of this section, the expression, third party information‖ means any information dealt with by an intermediary in his capacity as an intermediary.

[2] Rule 3. (1) Due diligence by an intermediary:

(d) an intermediary, on whose computer resource the information is stored, hosted or published, upon receiving actual knowledge in the form of an order by a court of competent jurisdiction or on being notified by the Appropriate Government or its agency under clause (b) of sub-section (3) of section 79 of the Act, shall not host, store or publish any unlawful information, which is prohibited under any law for the time being in force in relation to the interest of the sovereignty and integrity of India; security of the State; friendly relations with foreign States; public order; decency or morality; in relation to contempt of court; defamation; incitement to an offence relating to the above, or any information which is prohibited under any law for the time being in force:

Provided that any notification made by the Appropriate Government or its agency in relation to any information which is prohibited under any law for the time being in force shall be issued by an authorised agency, as may be notified by the Appropriate Government:

Provided further that if any such information is hosted, stored or published, the intermediary shall remove or disable access to that information, as early as possible, but in no case later than thirty-six hours from the receipt of the court order or on being notified by the Appropriate Government or its agency, as the case may be:

Provided also that the removal or disabling of access to any information, data or communication link within the categories of information specified under this clause, under clause (b) on a voluntary basis, or on the basis of grievances received under sub-rule (2) by such intermediary, shall not amount to a violation of the conditions of clauses (a) or (b) of sub-section (2) of section 79 of the Act;

[3] Section 79. Exemption from liability of intermediary in certain cases.–

(3) The provisions of sub-section (1) shall not apply if–

(b) upon receiving actual knowledge, or on being notified by the appropriate Government or its agency that any information, data or communication link residing in or connected to a computer resource controlled by the intermediary is being used to commit the unlawful act, the intermediary fails to expeditiously remove or disable access to that material on that resource without vitiating the evidence in any manner.

Explanation.–For the purposes of this section, the expression ―third party information‖ means any information dealt with by an intermediary in his capacity as an intermediary.

[4] Section 11. (1) Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit.

https://www.sebi.gov.in/legal/regulations/nov-2025/securities-and-exchange-board-of-india-investment-advisers-regulations-2013-and-securities-last-amended-on-november-25-2025-_98246.html