The Manitoba Securities Commission (MSC) and the British Columbia Securities Commission (BCSC) are warning investors who may have lost money in a York-Rio Resources Inc. investment that they could be targets of a ‘re-victimization’ scheme in which investors are being contacted by an organization out of Japan identifying itself as Penn Capital Management Ltd.

The securities commissions have contacted, or have attempted to contact, 50 York-Rio investors in Manitoba and 165 investors in BC to warn them about the scheme but are issuing this warning for other potential victims. Penn Capital Management Ltd. is not registered with the MSC or the BCSC.

Penn Capital Management Ltd. has contacted investors in York-Rio Resources Inc. with an offer to repurchase shares in what appears to be a ‘recovery room’ or ‘re-up’ scheme.  Potential victims who are prepared to pay a fee to the operators of the scheme are offered an inflated price for their shares. The operators of the scheme keep the fee but do not repurchase the shares. Although MSC and BCSC investigators have been contacting potential victims to warn them of the scheme, staff at the Commissions are concerned other shareholders have been or may be contacted.  If you have been contacted you should immediately notify your local securities regulator and ask to speak to an investigator. Other companies may be attempting to carry out the same offer. The MSC and BCSC are warning the public to be very cautious before making any investment.

Background

Manitoba, British Columbia, Alberta, Saskatchewan and Ontario Securities Commissions have issued orders to cease trade York-Rio Resources Inc.

This scheme is commonly known as “recovery room” or “re-up”. Victims of investment schemes are offered inflated prices for their shares. Once the investor agrees to sell their shares a contract is drawn up and they are instructed to wire a sum of money to an offshore bank account to cover business costs. The perpetrators withdraw the money that is sent to this offshore account and the victim for a second time loses money.

The Manitoba Securities Commission is a special operating agency of the Government of Manitoba that protects investors through educational programming and promotes fair and efficient capital markets throughout the province.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province.

Inquiries

Len Terlinski, Investigator Manitoba Securities Commission 204-945-2556 1-800-655-5244

Paul Bansal, Investigator British Columbia Securities Commission 604-899-6611 1-800-373-6393

If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at 604-899-6854 or 1-800-373-6393 or through e-mail at [email protected]. You can also file a complaint or submit a tip anonymous using BCSC’s online complaint form.

InvestRight.org is the BCSC’s investor education website. Subscribe to receive email updates from BCSC InvestRight.

Suggested Reading

Investor Watch: Scams in volatile markets

In Your Community - November 2013

OSC warns of Global Consulting, Financial Services and Crown Capital Management Corp advance fee scheme

More Resources

Tip shuts down illegal trading by Orion Advisory Services and IS Markets

Earlier this year, our enforcement division received an anonymous tip that Orion Advisory Services and IntelliSource Markets B.V. (aka IS Markets) were targeting Canadian and UK investors, eight of whom lived in BC. We were able to contact five of the eight BC residents. All said they had been cold called to invest in Orion. […]

Investor Alert: B.C. securities regulator cautions investors about investment pitches

December 22, 2008 The British Columbia Securities Commission  is publishing an Investment Caution List  to warn investors about unregistered companies that have contacted B.C. residents to open brokerage accounts, or buy unqualified investments that may not comply with securities laws. “The BCSC helps protect investors from unsuitable and potentially fraudulent investments through investor education and warnings,” said Brenda Leong, […]