MADRID, Jan 28: Spanish police said Wednesday they had arrested six people suspected of involvement in a fraud totalling 600 million dollars (450 million euros) on the London stock market.

Among the arrested is the suspected organiser of the scheme, which used forged documents and stock market operations to increase the value of shares in a company that were then sold at a profit, a police statement said.

“Through complex commercial and stock market operations, as well as falsifications, the arrested managed to make the value of the shares of a firm on the stock market increase, without deposits to back it up, and profited from the subsequent sale of the shares,” it said.

The names of those arrested and the company were not released by Spanish police but in London a spokesman for the holding company Langbar International Limited replied “yes” when asked if the firm was the target of the probe.

The arrests come as faith in financial markets around the world have already been seriously rattled by the international credit crunch and the alleged 50-billion-dollar pyramid scheme run by veteran US broker Bernard Madoff.

Britain’s Serious Fraud Office began investigating Langbar in November 2005 after it announced it “could not establish the existence of, nor verify its entitlement to, bank deposits with ABN Amro and Banco do Brazil” amounting to around 370 million pounds (395 million euros).

Trading in Langbar shares on the London Stock Exchange’s Alternative Investment Market was suspended at the company’s request a month earlier, according to a statement from the fraud office released at the time.

The company, previously known as Crown Corporation Limited, said it had assets worth 219 million euros when it was listed on the stock market in October 2003, police said.

It subsequently announced several financial operations “with the aim of generating an increase in the share price of the company,” police added.

“The investigation revealed that the listing of the firm on the stock market, as well as the public share listing, was achieved through fraud and various false announcements were made, in specialized media in London, to generate interest in the shares of the company,” the police statement said.

“Those announcements were allegedly planned by the main suspects who then sold the shares that they owned or existed in their name,” it added.

Four arrests took place in Barcelona and one each occurred in Alicante and Madrid, police said.Police carried out six searches as part of their investigation in which they seized several computers and extensive documentation.

Last year Langbar’s former chairman Mariusz Rybak and several others agreed to pay the company 30 million pounds in a settlement of claims over the disappearance of company funds, the Dow Jones Newswires reported.—AFP