YBM Stock and cheap prevention
Trading of YBM Magnex International shares was halted on the Toronto Stock Exchange, following the company’s failure to file audited financial statements. The investigation by US authorities is believed to involve allegations that YBM was used to launder proceeds of Russian organized crime (A company founder, Semion Mogilevitch, was barred from the UK in 1995 following a money laundering investigation). YBMs institutional investors seized control of the company last year, installing their own board of directors. But, in statement, the new Board said it remained unable to supervise YBMs ongoing business, or to ensure that its affairs were conducted lawfully, particularly with respect to its eastern European operations. The directors hired investigators to examine a range of questionable transactions by the company. In a report tabled with YBMs board of directors in January 1999, the investigators said it remained impossible to verify a number of YBM transactions. In most instances, significant transactions involving substantial sums of money are not supported by any documentation. Most of these transactions were carried out by United Trade, an unsupervised subsidiary of YBM. The investigators said that during their probe they became aware of substantial amounts of money being moved through the accounts controlled by United Trade. The YBM saga has led to questions about why Canadian regulators approved the stock for listing, and allowed the company to raise C$53,000,000 on the Toronto stock markets, despite repeated warnings.
YBM Magnex International, the magnet maker has, been turned over to a receiver and the company board of directors has resigned, saying there is no possibility the company shares will resume trading. The directors also warned late on Tuesday that they had been advised by the company ís counsel that YBM was certain to be indicted on criminal charges by a US grand jury unless it entered into a guilty plea agreement. For the first time since the US Federal Bureau of investigation raided YBMs Pennsylvania headquarters in May, the company has acknowledged that the US criminal investigation may involve or relate to the possible links between YBM and certain alleged organized crime members.î Ernst & Young, the accountants, have been appointed as YBMs receivers, with a recommendation from the directors that the company be sold off to reimburse some of the losses suffered by shareholders.•YBM, which manufactures high-performance magnets and bicycles, became a Canadian stock market darling earlier this year, reaching-a market value of more than C$900,000,000/US$600,000,000. The shares were bought heavily by big institutional investors including the Ontario teachers pension funds. This editor did a text search of UK publications. This text search showed the accusations on Mr. Mogilevitch in newspapers. A minor investigation into the background of the president by the Board of Directors or the stock exchange would have raised the necessary questions that could have prevented this public gaff and loss. We continue to be astounded by the number of companies which, against all reason, do not do even the most basic background checks on officers and employees.
