With contracts to provide free Wi-Fi in major cities, including Madrid and Paris, Let’s Gowex’s flamboyant CEO Jenaro García had seen the company’s share price balloon on Spain’s Alternative Stock Market (MAB), the country’s secondary exchange where a number of tech firms are floated.

That all changed with the July 1st publication of a damning report by the US investment firm Gotham City Research, claiming that Let’s Gowex’s results were largely fabricated and its stock absolutely worthless.

MAB overseers suspended trading in Let’s Gowex stock after its value fell by 60 percent in the two days after the Gotham report had surfaced.    

In the past week, Let’s Gowex has filed for creditor protection and García turned up at a Madrid court to confess that the company’s results for at least the past four years had been fraudulent. The MAB has seen stock prices tumble all round and at the beginning of this week four companies said they would be delisting from that market. García has resigned from his post.

"I feel ashamed as a Spaniard and as a professor of corporate finance because I know that American investors will say 'Oh, be careful before you invest in smaller companies in Spain,' " Robert Tornabell, a professor at ESADE business school in Barcelona, told The Wall Street Journal on Tuesday.

"This scandal must lead to stronger regulations, and the companies must have real auditors," Tornabell added.

The US financial daily pointed out that government officials and groups that had showered Gowex with awards attempted to dissociate themselves from its disgraced leader.

"When you give a prize, you listen to what the analysts say, what the market says, what investors say and everyone at that point thought they were good and worthy," a spokesman at Ernst & Young LLP, which had given Mr García an award for innovation as part of its 2011 Spanish Entrepreneur of the Year program, told The Wall Street Journal. "He has cheated the whole country and not just this country but France, the US, all of the world."

The newspaper also quoted a strongly worded editorial in the Spanish business daily El Economista:  "Gowex had discovered a toy market with few powers to function correctly.”

Meanwhile, the Spanish daily ABC has reported this week that investors are considering whether and whom to sue over the company’s collapse.

Asinver, a European investors’ association estimates that around 5,000 people have been affected as stockholders by Gowex’s “financial fraud”.  Asinver has taken complaints against Gowex, M&B auditors and Spain’s BME stock exchange holding company to public prosecutors, stating that most of those set to lose money are “small investors”.

The association says they have no chance of selling their shares while trading is suspended and, given that Let’s Gowex has entered bankruptcy proceedings, can never expect to see any decent return on their investment.    

“We are working with our legal and technical team to find the way to pursue the damage caused by those [who] may have responsibility for what happened,” Asinver told the newspaper.