KPMG Ready To Begin Distribution Of Portus Assets

Date: Tuesday, December 19, 2006
Author: Leroy James, Lawandtax-News.com

Receiver for failed Canadian hedge fund, Portus Alternative Asset Management is ready to begin distributions to investors, according to a filing last week in the Ontario Superior Court.

Last June, KPMG, the receiver, said it estimated that about 85% of funds would be returned, but gave no timescale. KPMG also asked the Court to allow those investors who invested in registered plans (about half of Portus's 26,000 clients) to receive payouts and put the money into a further registered plan without triggering a taxable event.

KPMG said in the summer that about $662.15 million (Canadian) and about $37.2 million (US) of Portus assets have been found and secured in 130 bank and investment accounts in Canada, the Turks and Caicos and the Cayman Islands, out of more than $800m that was collected by Portus. The majority of Portus assets remain tied up in notes issued by France's Société Générale which were purchased for $529m, and mature between 2008 and 2011.

Founder of Portus Boaz Manor - who fled to Israel after Portus collapsed - and co-founder Michael Mendelson have been charged by the Ontario Securities Commission with failing to act in good faith with clients. Mendelson was also charged with unregistered trading and issuing securities without filing a prospectus. The maximum penalties are C$5 million and five years in jail.