The Toronto Stock Exchange Disaster That Was Bre-X Minerals
The Toronto stock exchange disaster that was Bre-X Minerals is now the stuff of investor legend.
In the eyes of investors, it is one of the biggest corporate collapses of all time. However, there was much more to it than just a falling stock price. By the time the fraud was uncovered in May 1997, investors had lost in the region of 6 billion Canadian dollars!
Bre-X had been included in the top 300 companies which meant that mutual funds and many ordinary investors had bought, not fully appreciating the risks involved. This, of course, had taken the stock price higher and when panic selling began, the exchange's electronic trading systems crashed.
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As you might imagine, it did not take long for mining information and corporate disclosure procedures to be tightened for the entire Canadian stock market.
All in all, Bre-X was a disaster for the Toronto stock exchange and dented much of the credibility that the exchange had taken so long to build.
The story of Bre-X is actually quite fascinating and is retold in a number of places including a very well written 'Bre-X: The Inside Story of the World's Biggest Mining Scam' by Jennifer Wells.
It is, frankly, a cautionary tale for all investors that no matter how much research and analysis you may to understand a stock or investment, if company management decide to deceive, there is very little an outsider can do to spot or stop it.
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