‘Spanish police arrested six people in connection with a suspected $600 mn fraud in which shares in a company with little capital and fictitious operations were issued and sold on London’s Alternative Investment Market (AIM),’ reported the Financial Times last week.
According to the article, police claimed the six suspects used false documents and ‘complex stock market operations... to make shares in the company rise’. They then ‘enriched themselves via the fraudulent sale of the shares.’
Initial Spanish reports don't name the company involved, but the Serious Fraud Office confirmed it as Langbar; an AIM-listed company that was removed from the market back in 2005 when the fraud was originally uncovered.
What’s interesting is not only why it took four years to track down the culprits, but also how the company can still exist to this day.
It wasn’t until 2007 that the London Stock Exchange (LSE) took the appropriate disciplinary action against Nabarro Wells, the nominated advisor (or nomad) it fined for bringing Langbar to the market.
Even the LSE was surprised to learn the company still existed, when it spotted the firm's website was still functioning. It seems a group of recovery specialists have been brought in to try to get some of the shareholders’ cash back.