The regulators said they are closely monitoring the local stock market in light of the current price surge of selected stocks in the US markets, fuelled by social media chatroom groups moving against short sellers.

“Investors should also be wary of discussions in these social media chatrooms that may trigger security breaches such as the provision of investment advice or stock recommendations without a licence,” they said in a joint statement today.

Any person found guilty may be liable to a fine not exceeding RM10 million or imprisonment not exceeding 10 years or both.

In the wake of the GameStop phenomenon in the US, Malaysian retail investors have set up a group called BursaBets on social news aggregator site Reddit to discuss joint action to push up stocks of glove makers, whose share prices had dipped in recent months.

The regulators said market dynamics were different between the US and Malaysia.

“In Malaysia, regulated short selling is only applicable to approved securities in the RSS (Regulated Short Selling) list, which currently comprises 218 securities. Limits are also imposed to prevent excessive short-selling activities,” they said.

In addition, RSS trades require investors to either borrow the approved securities to be short-sold or have confirmation of borrowing of the approved securities. RSS must be undertaken in a designated account where sell orders must be placed at the best offer price or higher.

The regulators said they also conducted real-time monitoring of all trading activities to detect, analyse and escalate trading concerns promptly.

“Where warranted, the SC and Bursa Malaysia will take the necessary measures to curb disruptive trading practices and market abuse,” they said.

Earlier today, the Minority Shareholders Watch Group cautioned minority shareholders to exercise diligence and be aware of the risks involved when taking on institutional investors who short certain shares.