Manulife Financial chides competitors for not offering guarantees on Portus

Date: Thursday, March 31, 2005
Author: By RITA TRICHUR

TORONTO (CP) - Manulife Financial publicly scolded its competitors Wednesday for not providing angst-ridden investors money-back guarantees similar to the one offered by Manulife in the wake of the Portus scandal.
Manulife offered the unusual money-back guarantee after hedge-fund operator Portus Alternative Asset Management Inc. closed last month after regulators from across the country launched a co-ordinated investigation into its sales practices. Portus sold its investment products through third parties, including a Manulife subsidiary, which recommended Portus to thousands of customers.
"We felt it was appropriate to establish goodwill with our customers," said Peter Rubenovitch, Manulife's chief financial officer, during a financial services conference in Montreal. "Canadians would conclude if they were going to seek a party to deal with, that they would develop a preference for dealing with Manulife, who has stood behind its customers versus many of our competitors - some of whom have sold this product and have not stood up to protect the concerns of the customers."
Approximately 26,000 Canadians are waiting to see whether the $730-million worth of managed investment accounts, now frozen by securities regulators, will ever be recovered. Portus has previously offered assurances that investor money tied up in managed accounts was "safe." But that hasn't deterred several class-action lawsuits from being filed against a number of investment firms, including a subsidiary of Manulife Financial, alleging clients were steered unwittingly into risky investments while advisers pocketed huge referral fees.
Manulife, for one, has alleged Portus misrepresented its funds to the company and has guaranteed its clients that they will get back all of their principal. "The product was not as presented to us or to our intermediaries," Rubenovitch added. "We think our response has been well-received and we'll be placing customers in a safe position with some dispatch."
Last Thursday, the Ontario Securities Commission said the order appointing accounting firm KPMG as receiver for Portus was extended until April 8.
Earlier this month, KPMG reported that nearly a quarter of a billion dollars invested with Portus appears to have vanished into bank accounts in the Cayman Islands. Officials also said attempts were made to destroy corporate records and some key documents are missing.
Shares in Manulife (TSX:MFC) closed up two cents to $57.27 Wednesday on the Toronto Stock Exchange.