OCS places Portus in receivership- Order names KPMG as receiver of hedge fund

Date: Monday, March 7, 2005

Hedge-fund operator Portus Alternative Asset Management Inc. was placed in receivership Friday under a court order naming KPMG Inc. as the receiver, the Ontario Securities Commission announced Friday.
The order obtained by the commission gives the accounting firm control of all Portus assets and paperwork, and empowers KPMG to investigate the company and deal with questions and claims from Portus clients. "The appointment of a receiver provides a timely and efficient process to respond to Portus investors' questions and concerns", said Kelley McKinnon, manager of litigation at the OSC, in a release.
"We understand that KPMG intends to have a toll free telephone number in place early next week to answer questions." KPMG will be conducting its own investigation and is expected to set up a toll-free number for clients. The receiver is required to report its preliminary findings to the court within 15 days. Friday's court order came as another Canadian investment dealer was confronted with a class-action lawsuit for its alleged role in steering unwitting clients to Portus's controversial fund-of-hedge-fund investments.
The Berkshire Group, related to Michael Lee-Chin's AIC Ltd. of Burlington, Ont., and three of its subsidiaries are being sued in identical fashion to Manulife Financial Corp. and its subsidiary, Manulife Securities International Ltd. The latest suit is headed by Toronto litigators Joel Vale and Peter Jervis, the lawyers behind the suit against Manulife, which has insisted it was misled about the complex and risky nature of the Portus investments.
Manulife promised Thursday that all clients it referred to Portus will get their money back. Portus has offered an assurance that $717 million worth of managed accounts "are safe," but last month it laid off most of its staff. Securities regulators had already Portus from signing up new investors, taking further money from existing customers or returning invested funds to clients. On Thursday, two days after the lawsuit against Manulife became public, the insurer's chief executive, Dominic D'Alessandro, pledged to resolve the situation, apologized to clients and guaranteed they would get back 100% of their principal investment.