Editor’s note: This article was first published in July 2014, on the day the Gowex scandal broke; its warnings about MAB stocks were a forecast for the following trading session. The MAB has since been renamed BME Growth. In July 2014 Gowex’s chairman, Jenaro García, admitted that the company’s accounts had been falsified for years, and the company went into insolvency.
While we focus on Jenaro García, Gowex and Gowex’s shareholders, the truth is that the problem is probably more serious than it looks at first sight. The Mercado Alternativo Bursátil (MAB), the Spanish alternative stock market where certain small and medium-sized businesses have found a way to raise funding, has shown that its oversight of these companies is on a par with that of OTC Markets. After what happened with Gowex, some investors are already starting to get nervous, seeing these companies as penny stocks.
Most of these companies’ share prices were already under pressure on Friday, and after the scandal Gowex caused this Sunday, Monday could be a real bloodbath. Investors holding MAB shares whose high prices rest on the companies’ future targets will probably find themselves in a race where the last one to sell loses.
Doubts about the oversight that regulators have exercised over the MAB suggest that Gowex might not be the only company with unclear accounts. This is no more than speculation, but the fear among investors is real.
See also:
- How Warren Buffett warned us about Gowex, and we didn’t listen
- 19 investing secrets everyone should know before investing
Featured image: itupictures from Geneva, Switzerland, CC BY 2.0, via Wikimedia Commons.
