The company president, Sergei Mavrodi, advised investors to hang on to their shares, assuring them that the stock would bounce back. But financial experts said MMM could not hope to recover after such a dive and would probably be declared bankrupt within a matter of days.
'Even brokers who have seen everything did not expect such an unprecedentedly cynical step from MMM,' commented the National Financial Bureau on hearing Mr Mavrodi's advice. This was 'absurd and disgraceful', it said.
Before it became clear that MMM had effectively collapsed, frantic investors broke windows at the Russian Commodities and Raw Materials Exchange in Moscow as they scrambled to sell their MMM shares. Outside MMM headquarters on Warsaw Avenue leading out of the city, some 25,000 distressed people camped on the grass, hoping the company would honour the promise it made earlier this week to buy back shares at 115,000 roubles ( pounds 37). Places at the front of the queue were reported to be on sale for millions of roubles but there was no hope for anyone waiting outside.
According to Tass news agency, a few 'businessmen' with connections who had managed to get inside stood a chance of recovering their money. 'MMM is trying to pay its debts to the mafia, which has been holding lots of money in that company,' it quoted an unnamed commentator as saying. 'Pray to God that Mavrodi has enough money to pay off all the figures in the shadow economy.'
One would have thought ordinary investors in the scheme, which paid out dividends with nothing more than income from new share purchases, would have been in a mood to lynch Mr Mavrodi, who earlier this month was listed as Russia's fifth-richest man. But at the firm's Rileyeva Street branch, where as late as Thursday people were still trying to buy more shares, anger was mostly directed at the government, which had warned the public that investing in MMM was a gamble.
'Everything would have been fine if only the government had not interfered,' said Sergei Mikhailovich, an unemployed former state official who had been surviving on the income from his MMM shares. 'I don't know how I'm going to manage now but one thing is for sure, I will never buy shares again. For me, capitalism is discredited.'
Mr Mikhailovich, dressed in a suit which looked 20 years old and wearing thick spectacles held together with sticking plaster, was typical of poor and naive Russians who believed MMM's promises of fantastic wealth without any effort. Nightly the investment fund ran television adverts starring a fictional truck driver called Lyonya Golubkov who could afford to go to California because he invested in MMM. President Boris Yeltsin himself complained about the adverts but there was nothing the authorities could do, because Russia has no laws against pyramid schemes.
Many investors realised that they were gambling but got hooked, as in a casino, and thought they would be lucky. 'It had to happen,' said Kiril Konstantinovich, a businessman, 'but I did think the game would go on a little longer and give me time to pull out. It seems I miscalculated.'
So far there have been no reports of serious social unrest as a result of the MMM crisis, Russia's biggest financial scandal, but the fall-out may still be to come. Mr Yeltsin must be relieved that the State Duma is in summer recess and not asking awkward questions about the affair.