This is new to me, it probably was a scam, but the part about

  Investors lose 84% of their money some of the time and all of it 40% of the time

is meaningless. This could easily be true for many venture investments, which is how this exchange is presented. High risk investment is not the same as a scam.

Reminds me of small mining exploration companies in Australia's ASX. Most only exist to pay for the directors' lifestyles.

I've raised from angels in Vancouver. There is definitely a VSE hangover culture there. During the grind I had some strange experiences.

One involved an argument with the prospective investor over the share price. In their view it had to be between 20 and 50 cents. They didn't care about the valuation, or typical investment terms, only the share price.

Another invited us to an IPO party for another company they invested in (TSX if I remember correctly). At this party we learned that the company that IPO'd had less than 100k revenue (and huge losses). They were out of business within 3 years.

I guess it is hard for old dogs to learn new tricks... They made their millions off pump and dumps in VSE days and just didn't stop playing those games even long after the exchange shut down.

My Dad lost my college fund in the 1980s investing in the gold mining penny-stocks on the VSE. Fun times.

Low listing standards means all the frauds and trash will congregate there. The AIM market in the UK has a similar reputation.

When I started at Goldman Sachs, I was told early on of an "Israeli discount" and "Canadian discount"; that is, investors were more skeptical of companies based in those countries.

I was not told of any more details than that at the time, but I now wonder if the VSE contributed to this?