venerdì 10 luglio 2009

AIM link in 'boiler-room scam'

Aim link in 'boiler-room scam'

The London Stock Exchange is facing potentially embarrassing questions following the revelation that an alleged US based boiler-room operation had extensive links to the Aim market.

US prosecutors brought criminal charges – including securities, wire and mail fraud – against Ross Mandell, Sky Capital founder, president and chief executive and five others connected to the company, on Wednesday. The US Securities and Exchange Commission has also filed civil charges.

All six surrendered to FBI agents and later appeared in Manhattan federal court and entered pleas of not guilty before being released on bond. The SEC - which described the alleged fraud as a "trans-Atlantic boiler room scheme" – claim that Sky Capital raised $61m (£37.3m) between 2002 and 2006 from investors, but then prevented them from selling their stocks in Sky Capital Holdings and Sky Capital Enterprises, which were listed on AIM until 2006.

The Office of the US Attorney in Manhattan accused the men of enriching themselves with client money. "Investor funds were substantially used to enrich the defendants and others; to pay excessive undisclosed commissions to brokers and to pay off victims who had lost money through prior purported investment opportunities," the office said.

The allegations are a fresh blow for Aim, which has long been criticised for its light touch regulation. Two years ago Roel Campos, the US Securities and Exchange commissioner, attacked what he said was the "casino" culture of London's junior market.

The recession has taken a further toll on the market. In the last three months 73 companies have quit aim – while eight new companies have listed. Almost half of those that de-listed did so because of financial stress or insolvency.

A London Stock Exchange spokesman said that Sky Capital Holdings was de-listed almost three years ago and it was a "historic, closed case" that was unrepresentative of the "quality small companies on Aim today and the high regulatory standards that the London Stock Exchange promotes".

"The Exchange has an active programme of monitoring both AIM companies and nomads (nominated advisers)," he said.


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