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The new BlackBerry Key2 smartphone is displayed at a product launch event for the device in Manhattan in New York, June 7, 2018.Mike Segar/Reuters

Canadian regulators that police equity markets are wrestling with how to respond to a torrent of social-media commentary that appears to be behind wild swings in stock prices of companies such as Blackberry Ltd.

This week, a handful of companies, many considered to have dwindling growth prospects, saw their stock prices surge before a precipitous drop on Thursday. The frenzied trading activity is being attributed to a group of users of the social-media forum Reddit who urged fellow retail traders to drive up the price of select stocks that many professional investors on Bay Street and Wall Street had long ago dismissed.

Although it’s not clear if the online stoking of such stocks is illegal, regulators say they are closely watching the situation. Provincial securities laws forbid anyone from disseminating false information that has a significant effect on the price or value of a stock. However, it’s not clear whether that prohibition would capture the prognosticating on Reddit by users who identify themselves with names such as samuraiscramble and contrarian_gambler. The posts contain little financial analysis, and emphasize a need to increase the price of the stocks, not so much for sound investing reasons, but to prove the professionals wrong.

“It’s safe to say that this is pretty unprecedented,” said Peter Brady, executive director of British Columbia’s Securities Commission. “I think it will cause securities regulators everywhere to consider if a different approach is needed once they understand what’s happened.”

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The Investment Industry Regulatory Organization of Canada (IIROC), the self-regulatory organization that surveils, in real time, all trading activity on Canada’s five stock exchanges, said in a statement that it was concerned about the impact of such activity on investors. Dramatic price changes in Blackberry triggered three temporary trading halts in the stock on Thursday. IIROC also said two companies issued statements saying their businesses had no material changes to justify the increased trading activity. One was Blackberry, and IIROC declined to identify the other, citing the confidentiality of its discussions with share issuers.

“We are actively using all of our tools to monitor market activity, and ensure market integrity in order to protect Canadian investors,” IIROC said in its statement.

The Ontario Securities Commission said in a statement that it encourages investors “to first do research and consider getting advice from a registered individual.”

Although the campaign has been framed by many of its supporters as a sort of populist and organic movement to punish short sellers, who have suffered heavy losses because of the unexpected spikes, the truth about its origins is largely unknown. Only authorities that have access to trading activity and can subpoena Reddit and other social-media companies for identifying information about their users will be able to determine whether a possible criminal conspiracy was behind the price increases, said Joe Groia, a Toronto securities lawyer.

Mr. Groia, who headed enforcement for the Ontario Securities Commission in the late 1980s, said he was skeptical the movement is as loosely organized as it has portrayed itself.

“Regulators need to make sure at the core of this there aren’t some criminals who are engaged in a pump-and-dump scheme,” he said, using the term for distributing false information to inflate a stock’s price, and then selling the shares after attracting unsuspecting investors.

“What you have is almost a form of panic buying going on here, and I don’t think it’s good for the markets, and ultimately I don’t think it’s good for those investors in Blackberry who are buying in at a stock that’s now four times the price it’s been at forever,” he said.

Last week, an Ontario government task force called on the province to introduce a law that would forbid making a false or misleading statement about a publicly traded company – regardless of the effect on a stock’s price. The proposed law, which is similar to one passed in British Columbia last year, is designed to better equip regulators to prosecute those who manipulate stock prices in a pump-and-dump scheme, or in what is known as short-and-distort campaign. The latter involves short sellers, those who have bet that a stock will decline in price, releasing false and negative information about companies they target.

Cindy Tripp, a former managing director at GMP Securities and a member of the task force, said she believes some of the commentary that gave rise to this week’s trading frenzy would likely fall under the proposed ban – but acknowledged the task force never envisioned such a scenario.

As to whether this week’s phenomenon was scripted, or unspooled much more innocently, Ms. Tripp said: “I guess our regulators will have to get to work.”

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