Later that night, after he and the boys had had their supper, Eteo called Robert and Mario and agreed to meet them at the lounge of Sewell’s restaurant in Horseshoe Bay. They had been good friends and collaborators in the VSE for a few years, and although each of them had a different way of making money, they all shared the pot by buying positions in the various small companies they put together from time to time. Each of them represented a group of other investors a little further out but who would come each and every time with some funds for seed stock and a portion of the prospectus shares. The three men therefore had a good hold on the stock, since each of them controlled his own people in such a way that they all moved in the same direction every time they accepted a new deal. The new group of people would buy all their original share position at a good profit for the initial shareholders, usually leaving them with all the shares they had purchased out of the IPO or prospectus stock. Since the new group also brought in new shareholders, they all managed to sell part or all of their position at a lot higher level than their cost. This was the “shell game” the authorities now wanted to eliminate, if Rebecca’s sources were right.
However, this shell game meant lots of commissions for brokers, who held most of the prospectus stock, and for the brokerage firm, which bought and sold the large volumes of shares. Sometimes too, these deals had a sweetener for the broker in the form of the so-called broker’s warrant, which could be exercised at a very good premium, bringing both the firm and the broker a good chunk of money over and above the regular commissions.
Eteo had crossed such warrants, usually to the new group of promoters, at such a good level that he had taken in thousands of dollars, and sometimes a lot more than that, in just one trade. The shell companies also made good money for the exploration companies that performed the actual work on the initial property using a certain amount of money that each new company committed to spend out of the proceeds of the prospectus. The law firms made a ton of money too, charging the shell company thousands of dollars in fees, and the brokerage and the accounting firms got their share filing all the financial statements. Yes, the shell game meant a lot of money for downtown Vancouver, and everyone knew it, even the regulators, who had never wanted to shut the game down completely. It was only pressure from the newspapers and the George Gains type of reporters that made them squeeze the practice occasionally, just tightly enough to ease the pressure without ending the game.