VANCOUVER -- Think there's money to be made in spray-on appetite suppressants? Or baldness cures? Or the world's largest cultured pearl? If so, the Vancouver Stock Exchange is the place for you.

Forget Denver, forget U.S. penny stocks. This 87-year-old exchange on Canada's West Coast has been called North America's biggest den of white-collar scalawags, scoundrels, scam artists and -- occasionally -- real venture capitalists. As critic Adrian du Plessis said in a book on the VSE, as the exchange is called, it boasts "a savage array ... of unplugged, one-armed bandits."

"This is not a market for widows and orphans," said Dean E. Holley, superintendent of brokers for the government agency that oversees the VSE.

Asked to provide some recent examples of VSE-listed companies engaged in shady dealings, John Woods, president of the Vancouver publication Stockwatch, promptly punched up two firms on his computer. One's recent trading showed telltale signs of stock manipulation; the other had just announced that about $350,000 of previously announced sales were, in fact, nonexistent. Asked for more examples of suspicious actions in the last year, Woods looked startled.

"Oh, this year," he said. "I thought you meant today."

Here are some of the products with which, over the years, promoters of VSE companies have enticed investors: shark cartilage as a cancer cure, vitamin pills as a diabetes cure, a beehive-shaped cone that fits over the head to cure baldness, a spray-on appetite suppressant, a spray to kill the AIDS virus, a self-watering plant pot, a salt substitute for melting ice, computerized golf courses, mechanical windsurfing machines, cultured pearls (including an attempt to grow the world's largest), french-fry machines, French paintings and polyurethane horseshoes. Most of those companies have come a-cropper.

Holley, the regulator, said that on days when he is feeling optimistic, he estimates that something over half of the roughly 1,600 companies listed on the VSE are actually making a legitimate effort to earn a profit. He doesn't give an estimate for bad days.

An eight-month, $500,000 report commissioned by British Columbia's government to suggest reforms for the VSE and its regulators concluded last January: "Some companies financed by the VSE have realized significant successes, particularly in the resource sector. But these successes are overshadowed by the continuing occurrence of shams, swindles and market manipulations."

There is some hope in this city by the sea, however, that the reins may be tightening a bit. Spurred by the report, the provincial government is implementing new reforms for the VSE and its regulators, including -- for the first time -- the creation of a special office to investigate fraud claims.

In addition, bilked investors will be given more latitude to file class-action suits, a remedy little used in Canada. Membership of the exchange's board of governors will be expanded to include more public members, one of whom will be the chairman. And the securities commission will have the power to make legally binding rules.

Still, the reform plans are weaker than the report recommended. And the handful of people in Vancouver who have made a cottage industry of exposing VSE scandals say the problem is not so much the rules as it is the regulators.

"They don't have a regulatory mind-set. It's, 'Whatever we can do to help these guys out,' " said critic du Plessis, a former trader who since 1986 has revealed one sleazy deal after another involving VSE firms. After several months of working as an investigator at the British Columbia Securities Commission, du Plessis quit earlier this year, charging that regulators were not interested in going after the bad guys. And John Woods of Stockwatch said the commission displays "an astounding lack of curiosity."

Holley denies this, saying the problem is that the commission lacks resources and legal backup. With more resources, he said, the commission could easily triple the 50 to 60 cases it brings each year.

In Canada, unlike in the United States, the securities business is regulated by the provinces, not the national government. That has not kept the Toronto Stock Exchange, the second-largest in North America, from respectability. But in British Columbia, there is a long tradition of untrammeled free enterprise, dating from the founding of the VSE in 1907.

Then and for years after, the exchange was principally a mechanism for financing Canada's growing mining and, later, oil and gas industries. Even then, the VSE was known as a frontier exchange. But in the 1980s, the VSE's managers decided to move into commercial and industrial sectors. Enter a whole new wave of promoters and brokers on Howe Street, Vancouver's financial district.

To VSE President Donald J. Hudson, the exchange suffers mostly from image problems. Yes, he said in an interview, there are some deals that go bad, as in every stock market. But the VSE has the largest compliance staff of any exchange in Canada; it can and does impose fines and lifetime suspensions on brokers who break the rules, Hudson said. In the last six years, the exchange said, it has levied more than $730,000 in fines and disciplined 80 brokers and 25 firms.

"Sure, there'll be some fine tuning, but we're at a pretty good level at this point" in terms of compliance and enforcement, he said. In fact, he added, the VSE is worried that it overregulates companies that list here and is concerned that too much regulation is causing the steady decline in the number of new companies becoming listed on the exchange every year.

About 30 percent of the firms that list on the VSE are principally American, and the exchange markets itself widely in the United States. A recent seminar advertised in a San Jose newspaper drew 130 interested businesses, said David A. Laundy, VSE vice president for public affairs.

If they follow through, those firms will be included in the company of Cross Pacific Pearls Inc., which attempted to be the first grower of cultured pearls in North America but generated only $42,000 in revenue while shipping millions of dollars of investor money to Panama before it folded. The proprietor of the enterprise has temporarily relocated to the Cayman Islands.

Or International Nesmont Industries Corp., a gold refiner that inflated its inventory by substituting brass bars for some of the gold ones. Or Harvard International Technologies Inc., which was going to sell french-fry machines to Brazil and Guyana until two prototypes started smoking in the lab, prompting a call to the fire department. No machines were ever sold.

Anybody can fail at a business, and many honest efforts do. But those who watch the VSE closely are struck by the large proportion of companies that seem from the beginning to be more intent on inflating their stock price than in making profits. And somehow, when the roof comes crashing down, the insiders have already sold and are moving on to something else.

Maybe it was the brass bars, maybe it was the pearls, but there are other signs the VSE is losing some of its sparkle, besides the decline in new listings, from 317 in 1988 to 43 in 1993. The VSE index, unlike those of most equities markets, hasn't made up the ground lost in the October 1989 plunge that shook Wall Street and other financial centers. Its share of total volume and value in trading of Canadian equities has declined significantly in the last 10 years, to a quarter of volume and less than 4 percent of value.

Scandals involving a British pension fund and a Texas-based pension fund whose manager was convicted of bribery have put off a few institutional investors. Others are still coming in, however, among them European banks and pension funds and some U.S. mutual funds.

Perhaps they believe in the VSE's official motto: "Nothing ventured, nothing gained."

CAPTION:A WILD WESTERN MARKET (Graphic is not available.)