Can new rules protect investors from manipulating social media stocks?


    According to the Proposals, several important pieces of information would have to be disclosed in promotional communications, including the name of the promoted issuer, any compensation paid for the promotion, whether the person running the promotion owns any securities of the issuer, and other facts, which would make the person objective affect the carriage. The regulator also proposed other requirements for venture capitalists.

    If passed, the proposed rules would give the BCSC the power to monitor newsletters, emails, financial blogs, oral statements, social media posts and other forms of communication through any platform or medium.

    “This is a step in the right direction, with regulatory improvements and changes trying to keep up with the new digital world we live in,” said Russell Feenstra, a consultant at Nicola Wealth and one of the top 50 advisors by Wealth Professional for 2021.

    Feenstra told WP that the proposed rules would have no direct impact on his practice as his team does not promote or recommend individual speculative venture stocks for its clients’ portfolios. But more generally, he said they could improve the quality of advice and weed out individuals who could try to exploit investors through unscrupulous advertising programs.

    “Improved disclosure requirements could help investors, especially less experienced investors, avoid getting caught investing in a speculative company that is inappropriate for their risk tolerance or financial situation,” he said.


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