Canadian regulators have said they will act if they see B次元官网网址渁busiveB次元官网网址� or B次元官网网址渕anipulativeB次元官网网址� trading, as Reddit and other social media sites stoke stock mania.

But experts say that legal action is not straightforward: it depends on whether rallies in stocks like BlackBerry and GameStop are co-ordinated and harmful or simply cases of contagious excitement.

ItB次元官网网址檚 a debate thatB次元官网网址檚 playing out on the forums themselves.

On RedditB次元官网网址檚 Bay Street Bets, one user wrote of BlackBerryB次元官网网址檚 stock, B次元官网网址淲e will support it and make it climb together,B次元官网网址� while another decried the idea that individual investors are some sort of Reddit army.

Lawyer Chris Sunstrum says that based on whatB次元官网网址檚 been reported so far, the stock mania on Reddit forums is still in a grey area for regulators.

B次元官网网址淒oes this constitute market manipulation? B次元官网网址� I think what the regulators are trying to figure out is, have they crossed that line,B次元官网网址� says Sunstrum of Goodmans LLP.

B次元官网网址淵our typical retail investor just going on a chat board and giving their opinion, or helping rally the troops behind buying GameStop, is probably not going to be offside.B次元官网网址�

The warning about manipulative trading from the Canadian Securities Administrators and the Investment Industry Regulatory Organization of Canada on Monday came after BlackBerry shares whipsawed over the previous week, mirroring trends seen in the U.S. with GameStop, AMC and other securities.

Canadian silver mining companies have also seen a boost recently, although chief executives and Reddit users alike said social media is not the only factor behind the precious metalB次元官网网址檚 rise.

So far, the social media dynamic around so-called meme stocks doesnB次元官网网址檛 fit B次元官网网址渘eatlyB次元官网网址� into any of Canadian securities laws, says Sunstrum B次元官网网址� although it is still early days on the enforcement front.

Sunstrum says that out of all the potential accusations that could be brought against Redditors, market manipulation could become the biggest focus.

Canadian law prohibits doing something to artificially affect the price of a publicly traded security in a co-ordinated way, he says, though it can be a high bar to prove.

Another legal ramification for Reddit activity could be the charge of advising people about trading securities without the proper registration, though Sunstrum says itB次元官网网址檚 not clear thatB次元官网网址檚 been the case over the past week.

Sunstrum says that other offences that could come into play include misrepresentation, where a person or company makes a statement that they know or should know is misleading or untrue in any material respect.

To fall into this category, the statement would be expected to have a significant impact on the market price of the shares, Sunstrum says, although he noted that defamation and libel could also come up as separate legal issues.

Ernest Wong, director of research at Baskin Wealth Management, says the Canadian market already has some limits in place that make it unlikely the situation in the U.S. will play out exactly in Canada. Canadian regulators and finance websites donB次元官网网址檛 list short-selling activity in the same way as the U.S., and the options market here is much smaller, Wong says.

QueenB次元官网网址檚 University associate professor Mohamed Khimji says further regulation also risks doing more harm than good.

B次元官网网址淚s market manipulation the right expression? I donB次元官网网址檛 really have a problem with using that expression B次元官网网址� I think the question is, really, is the activity harmful? Does it have negative effects on market confidence, the credibility of the stock markets in general?B次元官网网址� asks Khimji, who researches business law.

B次元官网网址淎ny kind of buying and selling activity is going to manipulate the price at some level. ThatB次元官网网址檚 just how trading works.B次元官网网址�

Khimji says that Canadian securities regulators tend to take the lead from U.S. regulators, and that action south of the border will give Canadian regulators something to go off. But, says Khimji, the market may adjust on its own.

B次元官网网址淭heyB次元官网网址檙e really just two groups that have two different trading strategies B次元官网网址� Both sides will learn lessons by the end of it,B次元官网网址� says Khimji, referencing short-sellers as one group and retail investors as another. B次元官网网址淚 think this will just be priced in. Any short-seller of the future will think about this as a risk right here: what happened with GameStop, retail investors buying it up when itB次元官网网址檚 really cheap and driving up the price.B次元官网网址�

Increasing regulation on retail investors could actually have the detrimental effect of limiting participation in the market, says Khimji.

B次元官网网址淔rom a democratic perspective, I think itB次元官网网址檚 just helpful for as much (of) society to participate in the markets as possible. In any kind of regulation we need to be really sure that itB次元官网网址檚 going to help and not inhibit access,B次元官网网址� he says, adding the stock market B次元官网网址渟houldnB次元官网网址檛 just be for wealthy people.B次元官网网址�

Anita Balakrishnan, The Canadian Press

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