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Court OKs Bre-X class action settlement; investors get tiny fraction of losses

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Feb 23, 2008
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Court OKs Bre-X class action settlement; investors get tiny fraction of losses

[QUOTE]Bre-X became the largest mining fraud in Canadian history when its claim of a major gold discovery in Indonesia was found to be a fake in 1997. [/QUOTE]

http://www.thestar.com/business/2013/05 ... osses.html

Did anyone lose money on this stock back in 1997? Anyone had major losses like this on any stock purchase?
Lets Go Blue Jays!!!
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Feb 15, 2008
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Unfortunately the lawyers, the accountants, the police officers, judges, and public servants, got fully paid for their professional services in dealing with this company, and with the offenders in question.

Same nonsense happened at Nortel. The lawyers and accountants, stripped the company clean. Shareholders and employees lost enormously. It wasn't a bad engineer that caused Nortel to die, or some engineering mis-decisions. It was a bunch of incompetent managers, accountants, and lawyers, amongst others.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Mark77 wrote: Unfortunately the lawyers, the accountants, the police officers, judges, and public servants, got fully paid for their professional services in dealing with this company, and with the offenders in question.

Same nonsense happened at Nortel. The lawyers and accountants, stripped the company clean. Shareholders and employees lost enormously. It wasn't a bad engineer that caused Nortel to die, or some engineering mis-decisions. It was a bunch of incompetent managers, accountants, and lawyers, amongst others.
Not sure what this rant is all about? Police officers, prosecuters and public servants shouldn't get paid when going after bad guys? Obviously I feel bad for the shareholders, but there are risks such as fraud that you take when you invest in the stock market. The major issue I believe is the fact that stealing millions from shareholders is looked at as such a "minor offense" by the courts. They should get dozens of years in jail as well as enormous fines. How else to try and dissuade people in the future?
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The point was, a certain group of people made millions off of Bre-X, putting nothing at risk. While shareholders/investors lost everything.

How can we have a high-performance and growing economy when it takes 16 years and nobody really brought to justice?
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Mark77 wrote: The point was, a certain group of people made millions off of Bre-X, putting nothing at risk. While shareholders/investors lost everything.

How can we have a high-performance and growing economy when it takes 16 years and nobody really brought to justice?
I think blaming judges/cops for something that is completely the fault of management is kind of silly.
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Mark77 wrote: The point was, a certain group of people made millions off of Bre-X, putting nothing at risk. While shareholders/investors lost everything.

How can we have a high-performance and growing economy when it takes 16 years and nobody really brought to justice?
So judges, prosecutors and policeman should donate their money to investors who should know the risks to investing? There is fraud in every industry, this is yet another example. Also, aren't 2 of the founders of bre-x already dead? Tough to prosecute them.

This is a great, but tragic case for diversification or index investing. The stock market is a rigged casino, the only hope to come out ahead is index investing.
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Apr 16, 2012
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So Mark, you are saying that when a company goes bankrupt, the lawyers hired for that company should be working for free?
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I remember this scandal. What blows my mind is that the company survived it...
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At the end of the day this is the risk when you buy equity and why people should do due diligence on companies before jumping in both feet first. If you don't like it, then buy bonds. This is why investments have a risk/reward ratio.

When a company goes under the shareholders are some of the last on the list.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
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brunes wrote: At the end of the day this is the risk when you buy equity and why people should do due diligence on companies before jumping in both feet first. If you don't like it, then buy bonds. This is why investments have a risk/reward ratio.

When a company goes under the shareholders are some of the last on the list.
Maybe in a system without any rules at all, but there is some responsibility on the companies seeking investment to provide accurate and truthful public information. Are you saying that companies like Enron and Bre-X did nothing wrong and it's just buyer beware?!
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Kohanz wrote: ... Are you saying that companies like Enron and Bre-X did nothing wrong and it's just buyer beware?!
Yes... caveat emptor
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Kohanz wrote: Maybe in a system without any rules at all, but there is some responsibility on the companies seeking investment to provide accurate and truthful public information. Are you saying that companies like Enron and Bre-X did nothing wrong and it's just buyer beware?!
I did not say they did not do anything wrong. But yes, it IS buyer beware.

It's the same as if you buy something from Kijiji and it turns out to be stolen. The seller did do something wrong, but the police will take it from you, with no recompense.

Again, this is why equity has higher gains than bonds. There is higher risk. Substantially higher.

I had a bunch of shares in Circuit City, who went bankrupt. Bondholders were paid out. I got zilch. A bit of a different scenario in that nothing illegal was going on, but again - I had a huge risk as an equity holder and I knew that going into the buy below book.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
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Mar 19, 2010
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brunes wrote: I had a bunch of shares in Circuit City, who went bankrupt. Bondholders were paid out. I got zilch.
There is a big difference between Circuit City and Bre-X. You can do all the DD you want, but there is no way you will be able to figure out blatant fraud.
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Vitalogy80 wrote: Also, aren't 2 of the founders of bre-x already dead? Tough to prosecute them.
Yes, those 2 got what they deserved. But that one idiod Geologist is still alive and well living in his big house, down in the Bahamas? I believe. Why didn't he get prosecuted?
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angelok wrote: Yes, those 2 got what they deserved. But that one idiod Geologist is still alive and well living in his big house, down in the Bahamas? I believe. Why didn't he get prosecuted?
Cause life isn't fair? Cause bad guys get away with doing bad stuff sometimes?
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angelok wrote: There is a big difference between Circuit City and Bre-X. You can do all the DD you want, but there is no way you will be able to figure out blatant fraud.
I disagree. If you were following it at the time there were all kinds of warning signs, long before the official finding. People who were not overly greedy had tons of opportunities to exit and still keep lots of their gains. Many investors made a killing on BRE-X, who had nothing at all to do with the fraud, because they got out with their gains while they could.

More info, read up on the timeline. http://www.cbc.ca/news/background/gold/ ... eline.html. Key is look at March 12, stock is already up 200% when the first controversial findings are triggered; it stays over 150% gain for a whole other week! What were people doing during this week? In the end, people were just super, super greedy, and it bit them in the butt. A stock gains 2500% in a year with zero revenues and this is not suspicious? Why wouldn't you at least partially exit at 1000%, that's a pretty good return is it not? People on here are talking about 100% gains on TSLA and wetting themselves; on BRE-X people were at 2500% gains and still holding on until the shoe dropped. If you were 100% up on TSLA and a news story came out that their cars had a chance of exploding, even if they said it was BS... wouldn't you take some profits?
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
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Markham
brunes wrote: I disagree.
Even a reputable corporation like Freeport McMoRan could not figure out the fraud. How the heck did you figure it out? :lol:

1994-1995
Bre-X ramps up drilling program at Busang; stock trading at $14.87 by the end of July 1995.

October 1995
Bre-X says Busang's pegged reserves are 10 million ounces and could contain 30 million ounces. Analysts raise price targets and issue bullish "buy" reports. Stock soars to more than $50.

April 1996
Bre-X begins trading on the TSX; stock hits $180.

May 10, 1996
Bre-X stock price tops $200 on TSX. Stock splits 10-for-1 and soon reaches high of $28 ($280 pre-split). Company has net market worth of over $6 billion.

June 1996
Bre-X says Busang contains 39 million ounces of gold. One month later, it ups estimate to 47 million ounces.

Feb. 16, 1997
After 10-month dispute with Indonesian government, Bre-X and Freeport McMoRan reach agreement to develop Busang. Bre-X gets 45 per cent; Freeport 15 per cent; the Indonesian government and well-connected private Indonesian interests get the other 40 per cent.

Feb. 17, 1997
Bre-X ups Busang estimate to 71 million ounces.
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angelok wrote: Even a reputable corporation like Freeport McMoRan could not figure out the fraud. How the heck did you figure it out?
Nice how you comment two words of my post and leave out all the important parts.

Aggin.. it was a FULL WEEK between when the first suspicious core sample was revealed, and when it was confirmed. During this time the stock only dropped 20%. Assuming you had been in the stock for any kind of time and not a day trader, you would still be able to exit and make a killing. But the fact that it only dropped 20% during this whole week just goes to show how many people stayed incredibly greedy.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
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brunes wrote: Nice how you comment two words of my post and leave out all the important parts.

Aggin.. it was a FULL WEEK between when the first suspicious core sample was revealed, and when it was confirmed. During this time the stock only dropped 20%. Assuming you had been in the stock for any kind of time and not a day trader, you would still be able to exit and make a killing. But the fact that it only dropped 20% during this whole week just goes to show how many people stayed incredibly greedy.
Indeed. That makes you a pure genious and all those pension funds that lost millions were total idiots.

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