Vancouver Stock Exchange: Scam capital of the world (1989) [pdf]
scamcouver.wordpress.com132 points by thomassmith65 a day ago
132 points by thomassmith65 a day ago
One of the famous small canadian mining companies that went under was named something like Bre-X, somehow a lot of members of the general public had shares of it so it was a big scandal on the news when it went under. Also as it was unraveling a whistleblower at the company "fell" from a helicopter in indonesia, I don't recall if anyone was ever charged or convicted for that.
EDIT: Oh damn it was far sketchier than I recalled and he wasn't a whistleblower. From wikipedia:
The fraud began to unravel rapidly beginning on March 19, 1997, when Bre-X geologist Michael de Guzman reportedly died of suicide by jumping from a helicopter in Indonesia.[11][12] A body was found four days later in the jungle, missing the hands and feet, "surgically removed".[13] In addition, the body was reportedly mostly eaten by animals.[14] According to journalist John McBeth, a body had gone missing from the morgue of the town from which the helicopter flew. The remains of "de Guzman" were found only 400 metres from a logging road. No one saw the body except another Filipino geologist who claimed it was de Guzman. One of the five women who considered themselves to be his wife was receiving monetary payments from somebody long after the supposed death of de Guzman.[13]
BBC has a good audio series on this: https://www.bbc.co.uk/programmes/w13xtvt4
Granted, it's a bit drawn out, but certainly is a memorable story that perfectly encapsulates speculative behavior at every level.
Thanks to you I'm already 2 episodes in and they say Bre-X was traded initially at Alberta SE and then Toronto?
I was born and raised in Vancouver, and have deep personal ties to the junior mining industry - I worked for two decades as an exploration geologist, and my Dad has been in the industry since the early 1970s.
Bre-X was brutal. I was barely into my teens, but I recall - and have spoken at length with my Dad and many others - about how he was out of work for several years after the scandal. Investment completely dried up. Industry recovery took years, and was accompanied by the implementation [1] of fairly stringent disclosure rules, which define reporting standards to this day. Nonetheless, scams are still commonplace, and pretty much everyone I know has a story or two of a shifty promoter pulling the rug out.
Mineral exploration is a tough business. You can't just sudo apt install a drill rig! The logistics and expense of even small exploration programs are a bit insane. Crews head out to some of the most remote corners the world has to offer, moving hundreds of thousands to millions of dollars of heavy equipment, fuel, food, and camp gear on to site for just a few months of near-constant work, then moving (hopefully most of) it out again. Hundreds of tons of rock and soil samples are collected, by drilling, by walking the ground, by trenching; these samples are shipped out to processing and assay labs. Some properties have the benefit of road access - deep-wilderness, often decommissioned logging roads - but many are accessible by helicopter only. It's an adventure, but it is also very demanding and taxing. There is very little year-to-year consistency, even in bull markets.
Sixty to seventy years ago, the majors - mining companies with actual mines and annual revenue - did the lion's share of exploration work. Over the years, however, the majors have divested almost entirely from risky grassroots exploration, leaving it almost entirely up to junior explorers who must raise their capital from investors.
There are lots of fascinating tales:
- How to Get Rich in a Gold Rush: https://youtu.be/yW5iGLLgzRc?si=Pk_9eZF0vBEjF2f4 two-part youtube documentary on the VSE
- Gold: https://en.wikipedia.org/wiki/Gold_(2016_film) great movie starring Matthew McConaughey, loosely based on the Bre-X scandal
- The Big Score: https://www.goodreads.com/book/show/2370656) excellent book that covers the story of the Voisey's Bay discovery in Labrador
- Fire Into Ice: https://www.goodreads.com/book/show/1166624.Fire_into_Ice_Ch...
- Barren Lands: https://www.goodreads.com/book/show/22322947-barren-lands
[1] https://www.cim.org/news/2019/how-cim-helped-an-industry-roc...
I've raised from angels in Vancouver. There is definitely a VSE hangover culture there. During the grind I had some strange experiences.
One involved an argument with the prospective investor over the share price. In their view it had to be between 20 and 50 cents. They didn't care about the valuation, or typical investment terms, only the share price.
Another invited us to an IPO party for another company they invested in (TSX if I remember correctly). At this party we learned that the company that IPO'd had less than 100k revenue (and huge losses). They were out of business within 3 years.
I guess it is hard for old dogs to learn new tricks... They made their millions off pump and dumps in VSE days and just didn't stop playing those games even long after the exchange shut down.
My experience raising in Vancouver is that there are two angel communities.
There is an easier to find Vancouver-centric investor group that behaves as a you describe. Many of these investors didn’t come up as tech founders. I was advised not to waste time with them, so I don't know if there are some gems in the rough there or not.
Then there is a quieter group that got their capital from building serious tech businesses. This group spends more time connecting outside Vancouver – Bay Area mostly, but also Toronto and globally. These folks do write early-stage cheques and can be very helpful advisors, but they're not full-time angels who are spending time on deal flow. They're mostly focused on building their next thing, so it’s more difficult to earn their attention.
So yes there are questionable actors, but there are also very legit folks doing great work, and it’s possible to go to an event or dinner party that only really has one or the other. Hope that’s helpful to any other founders building in Vancouver!
Yes, well said. This is what I noticed as well, though it me a few years to work it out.
In general, the Vancouver culture is very different from most places, and not recommended for small firms serious about growth (even with revenue over $4m you should talk with AMCHAM to figure out an exit-to-grow strategy.) No other "Angel Investors" typically ask people to table personal assets for deals. It is actually an absurdly risk-averse place, with predatory VC terms often far worse than simple bank loans.
Vancouver has all the same problems as New York, but none of the advantages. Better options exist unless your business is rocks, logs, or crime. =3
Friend of a friend etc. was part of 1%er MCs. The money was marijuana and steroids from BC to US. They just drove trucks through backroads over the border. I guess the bikes were for fun
Even though the exchange has become the TSX Venture exchange, Vancouver remains the centre for junior mining companies, of the sort where scams are common.
I used to work in Downtown Vancouver and would on occasion get my haircut at a downtown barber frequented by office workers all around, and those barbers were a wealth of knowledge about the latest gossip from shifty junior miners and whatever they were into, which was increasingly not mining, but trendy startups.
Funny thing was when I was working in the area mining was going through a bit of a downturn, so a lot of the junior miners were shifting into other hot things they could fundraise for, like cannabis and crypto. From scam to scam to scam.
I stopped working downtown so stopped getting the gossip but I presume they swiftly pivoted to NFTs and onto whatever flakey thing they could still dubiously attach a .ai domain to.
I just happened to be going through every stock in the TSX from smallest market cap to largest. Many of the stocks at the bottom were mining companies that started with some huge spike then faded into nothing for the next N years until the current state of what seems to be basically dead.
I assume you’re referring to crypto mining, but the mental image of handlebar-mustachioed ore miners gossiping in Vancouver barber shops about how to scam investors with their shaft-digging operations is quite hilarious to think about! Pickaxes must be left at the door after the Incident.
He’s actually talking about guys banging on rocks looking for gold. So to speak.
My dad is involved in junior mining projects (geology, not gpu), and, yep, Vancouver is where you go to find these sorts of things, legitimate or not.
Oh no absolutely real mining.
But ultimately the transferable skills are pitch making, selling to investors, pumping and dumping.
That applies not just to some plot of land in some obscure place that has some "enormously promising" signs of valuable minerals, but also some new crytocurrency, NFTs, cannabis, VR and all sorts novel things. AI is the latest thing but it won't be the last.
When mining is hot they'll focus on mining, but when it's not they'll be looking to see how they can use their skills on other places.
(Not to say that any of these things are necessarily scams per se, I personally think there's lots of interesting things going on with AI, but this is the ocean that these guys swim in, and there'll be lots of money attaching some flimsy nothing idea to the latest hot trend)
that's pretty accurate ;) I used to live in Vancouver too and ... some of that culture's like that. Most is good 'ol "people in suits" though.
A long time ago, Vancouver was a center of gold mining scamming too. "Gassy Jack" downtown was one of the major scammers near the founding of the city.
Hey I am thinking of moving there. From abroad. Is it a good move or should I go with Toronto?
The skiing and hiking makes me want to go to BC
... Visit first. When I left (2018-ish) Vancouver was one of the most expensive cities on the planet. (put it this way : the only places more expensive were in China ...). It's a beautiful city, close (ish) to skiing - especially Whistler (2 hours drive, or various other transportation methods) but there are a lot of closer ski sites too. Warmer and wetter than Seattle (slightly) due to being surrounded by mountains. I have to admit I miss Vancouver badly.
Toronto's a much better "hub" for tech work. (I work remotely out of Winnipeg now, and am liking that too).
Mind, Vancouver does have a lot of tech, and if you want to work more with tech world that speaks other world languages, Vancouver is very good, too. Or music, or film, or really media of any kind. Also better diversity and cheaper food than almost anywhere I've visited.
Just not - unless you really figure out where and how to look, or if you have good connections - a particularly affordable city, at least as far as rent goes. Everything else though is good.
Energy (oil & gas) and Resources (mining) have some serious scams, minor coup d'états, and no shortage of the not so funny.
Common low level scams such as falsifying assay results from ground and bore hole samples are just the beginning.
More questionable scams tap dance about questions of who really owns or controls resources, who can be paid off, and how to bury money spent greasing wheels by various means.
In mining, you'll often see events such as:
* https://www.business-humanrights.org/en/latest-news/australi...
* https://www.theguardian.com/australia-news/2024/nov/18/resol...
Multiple sides to both these events.
My first thought was ore mining before crypto mining. I think I've recovered from the days of crypto induced mania where every other article on Hackernews was cryptocurrency related.
It's worth mentioning that the 'culture' you describe is also something that significantly aided and abetted various real estate scams and bubble related activity. Vancouver has all sort of shady shit going on in real estate.
> the nost respected fiction authors in Canada are Margaret Atwood and Robertson Davies, but no-one churns out a body of fiction as consistently high a quality as the companies listed at the VSE
That line got me chuckling.
When I started at Goldman Sachs, I was told early on of an "Israeli discount" and "Canadian discount"; that is, investors were more skeptical of companies based in those countries.
I was not told of any more details than that at the time, but I now wonder if the VSE contributed to this?
In the latter case, yes. Israel is because reasonable geopolitical doubts.
"Binary Options" scams are synonymous with Israel, had victims world-wide and faced no domestic consequences for many decades.
This is new to me, it probably was a scam, but the part about
Investors lose 84% of their money some of the time and all of it 40% of the time
There is a real difference though. Individual investments might lose all their money but as an aggregate VCs make money by investing in dozens or hundreds of companies. No VC is losing all their money across all their investments but that's what this article is claiming happened to investors on VSE.
Some number of VC with some certainty are losing all their money. But you just don't hear from them anymore.
My Dad lost my college fund in the 1980s investing in the gold mining penny-stocks on the VSE. Fun times.
My dad lost my sibling's college fund in the dotcom bust! Some things never change..
I've invested in junior mining stocks. The rare earths are hot right now (12 Oct 2025). As a whole the group is supposed to lose money every year. It's just a question of will they lose a little or a lot. I see people rushing in right now because China is restricting the export of rare earths. They don't know the flaws these companies have. But they will :)
Fun piece of writing. Well written.
This still goes on today, to some extent, with the TSXV venture exchange. Listing standards are low and many mining companies go here to raise speculative capital. There are some successes, diamonds in the rough, so to speak.
Reminds me of small mining exploration companies in Australia's ASX. Most only exist to pay for the directors' lifestyles.
How does that work? Is there anything you can point me to where I can read more about this?
I, naively, would have assumed that publicly listing your company would be anathema if you're up to sketchy shenanigans.
There's a brief discussion here: https://www.reddit.com/r/geology/comments/jnqqym/fraudulent_...
Isn’t there this whole weird economy of empty pink sheet companies that just act as lifestyle funding for people?
If by lifestyle funding you mean money laundering and tax write-offs. Have a bunch of legal-or-otherwise income? You need one person in a suit who can register a company and shuffle paper around. A bunch of retirees or something somewhere paid $1 each to your company. They even paid in cash. Hooray. Now you are a successful legal business person minus the filing fee.
Now, you're so successful you don't want to pay taxes or get audited. Your business made N dollars this year. You spent it all investing in some long term investment on paper. Damn, your businesses didn't make money now. No taxes I guess, takes money to make money. Hopefully that long term investment in several shell companies in different jurisdictions works out. Hopefully law enforcement isn't resourced enough to track it down.
Who suffers? Literally everyone else who pays into a system that's supposed to be fair. There's a tipping point where no people who make money pay into it. I suspect this has kind of already occurred tbh.
1989. The good old days, before blue-sky scams went mainstream.
Low listing standards means all the frauds and trash will congregate there. The AIM market in the UK has a similar reputation.
To some extent, you see a similar dynamic happening on the ASX (Australian Stock Exchange) to this day. Plenty of mining companies that purchase the rights to explore for resources in some African territory with questionable governance concerns that serve as shells for directors to cash in fees. Lots of biotechs with similar track records there too.
The saying still holds, a mine is a hole in the ground with a liar standing next to it.
Vancouver still functions at least as sketchy plumbing for the US financial system
I don't think there is any regulator quirk or shielding from doing it up there, people up there just do it
regulator quirk
There is, sort of, but it's a constitutional quirk. Securities regulation is, for weird historical reasons, a matter of provincial jurisdiction; past Federal governments have said "hey look this is stupid let's just merge the regulators so we can do one good job instead of 10 bad jobs" but politics got in the way.
If the US SEC were replaced by 50 per-state SECs, you'd probably see Alaska or Wyoming becoming the scam capitals because they lack the resources to properly regulate.
>If the US SEC were replaced by 50 per-state SECs, you'd probably see Alaska or Wyoming becoming the scam capitals because they lack the resources to properly regulate.
Arguably a distinction without a difference but I think you'd have Delaware or somewhere that has plenty of resources being the scam capital and they'd make money off it. Then you'd have a bunch of over-regulated dumps that have driven out their industry and they'd all be screeching about Alaska for having fairly permissive regulations while ignoring the 800lb Delaware in the room. And the other 35ish states would be in the unremarkable middle ground.
You already somewhat see this kind of pattern across existing interstate industries.
>If the US SEC were replaced by 50 per-state SEC
In the US, states perform a fallback-SEC role for certain investments. While state-level commitment to combatting fraud may also be questioned— looking at you Kansas— the existence of a backup system does provide a useful “now entering Oz” kind of warning.
> If the US SEC were replaced by 50 per-state SECs, you'd probably see Alaska or Wyoming becoming the scam capitals because they lack the resources to properly regulate.
Sure, but BC is 10× the population of Wyoming, so that's not really the best comparison. Plus, Delaware is tiny, yet their business regulations are fairly strong.
> past Federal governments have said "hey look this is stupid let's just merge the regulators so we can do one good job instead of 10 bad jobs" but politics got in the way.
It gets messy. Ontario is the de-facto "legitimate" Canadian securities regulator because it's where our overwhelmingly largest stock exchange is (the TSX). Ontario obviously wants to protect that. When he was Minister of Finance for Ontario, Jim Flaherty defended the status quo tooth and nail. As soon as he became minister of finance federally, he immediately changed his tune.
Part of the problem is that the constitutional quirks in Canada have frustratingly annoying jurisdictional separations. For example, criminal law is a federal responsibility. The provinces cannot sentence somebody to prison for more than 2 years (which is why you often see people sentenced to "two years less a day"), so securities violations that aren't outright traditional fraud are essentially a slap on the wrist. There are other quirks, for example criminal law is defined federally, but policing is mostly provincial. There's also the fact bail is set at the provincial level and the federal government gets enormous grief about people getting bail too easily, when it's the provinces not properly funding the jails, forcing judges to essentially let all but the worst offenders out to reoffend (the problem is somewhat overblown in the media, but it is a problem).
The issue is made worse by the fact that the last time somebody tried to amend the constitution, it blew up in the government of the day's face (that was already unpopular for other reasons) and politicians have been fearful of touching it since, because they know it'll balloon into all sorts of regional demands - the constitution was barely able to be patriated in the early 1980s - and even then with some very questionable clauses:
https://en.wikipedia.org/wiki/Section_33_of_the_Canadian_Cha...
The provinces cannot sentence somebody to prison for more than 2 years (which is why you often see people sentenced to "two years less a day")
No, that's a separate issue. Sentences of less than 2 years are served in Provincial custody; longer sentences are served in Federal custody.
Ah, I think you're right. I was quoting from memory, but it's still a strange separation.
It dates back to the construction of Kingston Penitentiary. They needed a rule to determine who would serve their time in local prisons and who would be sent to the Pen.
I was referring to the US SEC and DOJ, they will easily establish jurisdiction against anyone touching US markets in some way, anywhere in the world
Including Vancouver
(The US has state level securities regulators too, but they are redundant, weak and almost defunct, but they still exist in every state.)
There is no obvious benefit to being sketchy in BC aside from many things are legal in the US, it’s just a matter of convincing investors to invest
I guess there’s just a sketchy network up there
Sketchy and Vancouver go hand-in-hand.
I live and work here. I play it straight and do my best.
However, the culture here pushes for a lot of sketchy things, often to make up for lack of productivity or some other deficiency.
I was referring to the US SEC and DOJ, they will easily establish jurisdiction against anyone touching US markets in some way, anywhere in the world
They can claim jurisdiction, sure, but they can't execute search warrants or arrest people in Canada. Our agencies are generally happy to let the SEC clean up our messes for us, but the paperwork still slows things down compared.
I see, procedural hurdles to getting enough evidence
I just see the announcements when the US has decided it has enough evidence
They’ll file for extradition in a criminal case, Canada is not a place that would reject that
and even if it was, the US waits until people go on holiday to a place that is more cooperative
On the topic of low-quality investments, there should be a posting rule that HN submissions consist of text, not pictures of text, so readers can search for additional information by copying text, not images.
Nothing is more frustrating than an image-based PDF masquerading as text, especially now that, with little time or effort, OCR can convert most images into text documents.
This image-based PDF made my morning. I wish journalists would write like this these days, as opposed to jamming their reports through an LLM.
I would rather something interesting without OCR is posted that not at all, especially if an OCR version is not available.
It's not my site but I'm the one who posted it here. The nice thing about a scan (if it's good quality) for an old article like this is it viscerally provides some context (eg: the era and type of publication). The scan quality here is abysmal, and for that I do apologize.
as someone blind, there is one more reason to consider image based pdf-s undesirable. OCR works okayish most of the time, but it tends to suck when it does not and if the layout of the scanned page is complex, the output often breaks down. Not to mention that the friction of converting it is a disincentive to bother.
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