Investor Alert: 'Recovery Room' scheme targeting Morgan Dragon Development Corp. investors
CALGARY, Jan. 28, 2014 /CNW/ - The Alberta Securities Commission (ASC) is warning Alberta investors of a 'recovery room' scheme that is targeting Morgan Dragon Development Corp. (MDDC) investors. Recovery room schemes typically involve companies that contact investors, who have money tied up in an illiquid investment, with an offer to buy their shares at an inflated price. Once investors agree to the deal, the operators of the scheme ask the investor to first pay a fee for the service/transaction. In reality, the operators keep the fee but do not repurchase the shares, effectively victimizing the investors a second time.
The ASC has been alerted that G.W. Trust and Transfer Services Limited, purportedly operating out of Thailand, is contacting MDDC investors and offering to buy their company shares. As part of the pitch, investors are told this is a limited-time offer and that before receiving any money from the purchase, the investor must first pay a "non-resident tax" based on a percentage of the inflated share price, usually in the thousands of dollars.
The ASC is cautioning MDDC investors against participating in the offer or sending money to this company. The ASC wants MDDC investors and others to know that there are a number of red flags that lead the ASC to believe this is a recovery room scheme, such as:
- unrealistically high returns;
- money sent offshore;
- money must be paid up front;
- pressure to act quickly; and
- spelling errors in the documents related to the offer.
To help the ASC protect investors, anyone who has been approached with an offer by a company offering to purchase MDDC securities is asked to contact the ASC Public Inquiries group at 1-877-355-4488 or firstname.lastname@example.org.
The ASC previously banned MDDC from trading in or purchasing securities, and from using any registration exemption contained in Alberta securities laws until April 2018.
For more information on how to recognize scams and how to make informed investing decisions, visit the ASC website at www.albertasecurities.com.
The ASC is the regulatory agency responsible for administering the province's securities laws. It is entrusted to foster a fair and efficient capital market in Alberta and to protect investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada's capital markets.
SOURCE Alberta Securities CommissionFor further information:
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Toll Free 1-877-355-4488