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Tuesday, November 19, 2019

Portus investors to share $100M in settlement


Date: Wednesday, September 26, 2007
Author: Peter Brieger, Financial Post

Portus Alternative Asset Management Inc. investors will soon receive cheques worth a total of $100-million, marking a long-awaited first payment after the defunct hedge-fund company's collapse.

An Ontario court was told yesterday of the payments to 16,000 investors and $13.5-million in fees charged by bankruptcy receiver KPMG Inc. and lawyers for several parties involved in the case.

KPMG has said that more than 26,000 Portus investors will get back about 85 on the dollar.

Founded in 2002, Portus grew quickly as investors bought notes that promised to protect buyers from a drop in the market while giving them the chance to profit from any gains.

The firm amassed assets of almost $800-million before it was pushed into receivership two years ago. Investors' money has been tied up as the receiver traced the funds, most of which was sitting in notes backed by French banking giant Societe Generale.

A KPMG report this year showed client money transferred to a string of offshore accounts and then back to Canada, without ever being invested on behalf of the firm's investors.

Among the missing money and assets are $8-million worth of gems that company co-founder Boaz Manor allegedly purchased with client money. Mr. Manor, who has denied any wrongdoing, is facing seven Securities Act charges, each of which carries a maximum penalty of five years in jail and a $5-million fine.

His business partner, Michael Mendelson, is also facing unproven allegations in the scandal, which was a debacle for Canada's hedge-fund industry and embarrassed companies such as Manulife Financial Corp., which referred investors to Portus in return for fees.

pbrieger@nationalpost.com