If you were alive and of adult age in 1997 you will remember the Bre-X case. Gold was found at a mine in Busang, Indonesia and early testing indicated that it would be the most lucrative mine ever found. The stock market went crazy with shares through the roof.c
It turned out that the tests had been falsified by salting the samples with gold from other sources (including, according to some reports, gold that came from melted down jewellery). It was never determined who was responsible for the salting and falsification of the initial tests.
It turned out that the tests had been falsified by salting the samples with gold from other sources (including, according to some reports, gold that came from melted down jewellery). It was never determined who was responsible for the salting and falsification of the initial tests.
The collapse of the Bre-X stock caused an estimated $3-6 Billion in losses, essentially ruining the junior resources market in Canada. The head of the TSX was fired in the aftermath.
The geologist in Busang, Michael de Guzman, is presumed to have died in March of 1997 falling out of a helicopter just as the scandal exploded. The President of Bre-X, David Walsh, died in June of 1998 of a brain aneurysm. This left John Felderhof, Bre-X's chief geologist, as the most senior executive of Bre-X who could be held responsible for the fraud.
In 1999, the RCMP announced that they were not laying charges against anyone because they did not have sufficient evidence to pursue a criminal case. The next day, the Ontario Securities Commission (the OSC) announced that they would be bringing charges against Felderhof. Felderhof was eventually charged with four counts of insider trading and four counts of authorizing false press releases. No one else from Bre-X was prosecuted.
Joseph Groia was the lawyer who defended John Felderhof in the OSC trial. Although it took about seven years for the trial to conclude, Felderhof was eventually acquitted on all counts and the OSC did not appeal. Though many years had passed, the acquittal caused shock and disappointment for investors still suffering from the effects of their substantial losses.
Class action civil cases against Bre-X are still ongoing.
