The stiff sentences handed two Vancouver stock promoters for their part in the Oct 19 trading debacle more than two years ago should go a long way to curbing such abuses in the future. The promoters — Erich Brunnhuber and Engelbert Roosen — each received 7-year sentences. Ironically, the jail terms were a year more than they would have obtained had they pleaded guilty.
The two men had set up bogus accounts at several brokerage firms to create artificial demand for shares of Beauford Resources. Those shares climbed about $8 to the $12 level over a 6-month period, then suddenly collapsed to $1 within hours on what has been described as “Black Friday.”
Media criticism of the VSE was merciless and sometimes unjustified, but to its credit the exchange moved quickly under difficult circumstances to undo the damage that had been done. Major policy changes have been initiated since that time and disciplinary actions involving member firms are being made public in a much more timely fashion.
The monthly offering of fines and suspensions, while understandably negative by nature, has demonstrated to the public that something is being done about unscrupulous business practices. And the severity of the sentences recently handed down shows the court will also assist in protecting the integrity of the market and Vancouver’s financial community as a whole.
Over-all, it has been a good year for the Vancouver Stock Exchange w ith records set in all areas of trading activity (see separate story). But most importantly, its credibility has improved significantly although there are still some areas of concern. Claims made by companies are often unsubstantiated and detailed information on so-called “new discoveries” is often unavailable. The exchange’s policy of timely disclosure must also include something on the quality of disclosure as well.
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