The news that AIM-quoted Lekoil has been defrauded of US$600,000 in an alleged scam has led to the usual round of negative headlines for the whole AIM market following the scandals involving Patisserie Valerie and Burford Capital last year.
Lekoil's shares dropped 70% after it announced the news that it had paid an arrangement fee to a Bahamas-based consultancy, Seawave, to arrange a US$184m loan on behalf of the Qatar Investment Authority. It appears that Seawave had no authority to arrange the loan although it has since said it would address the scandal.
Behind the negative headlines it is important to remember that AIM was established as a growth market and remains one of the most successful such markets globally. As a market established for smaller, early stage and riskier companies investors generally understand that there is an inherent risk in investing in AIM companies. There are huge benefits to small-cap companies in being able access funding through the capital markets and it would be a shame if a few bad apples spoiled the whole barrel.
"...one of the biggest scandals to hit Aim..."