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IFB calls OSC to bear cost of Portus investigation

Date: Monday, April 18, 2005
Author: By IE Staff

Independent Financial Brokers of Canada (IFB) is calling on the Ontario Securities Commission OSC take responsibility for the cost of investigation in Portus Alternative Asset Management.
Last week, IFB President David Barber wrote to Ontario Management Board Chair Gerry Phillips regarding the matter, on behalf of its members who referred clients to Portus.
The OSC issued a temporary order against Portus in February while it investigated alleged compliance gaps. That order was subsequently extended, and Portus was prevented from accepting new funds – a move that the IFB says effectively forced Portus into receivership and precipitated the appointment of KPMG as receiver.
IFB says it took the step to write to Phillips when, most recently, KPMG asked for, and received, permission to apply for a bankruptcy order and to transfer an initial sum of $11 million from a Portus bank account to an account out of which the expenses of the receiver and representative counsel Fraser Milner Casgrain LLP will be paid. “This is investor money,” said Barber, “and IFB is concerned, as are its members, that a lengthy and exhaustive investigation will only serve to rapidly deplete investor funds.
The investing public should not have to forfeit their savings in order to pay for this investigation.” In its letter to Phillips, signed by Barber, IFB proposes that the OSC take back responsibility for the cost of this investigation. This is appropriate, notes IFB because “the scope of this matter continues to broaden - apparently well beyond the original mandate involving compliance issues.
If the OSC and the receiver believe there has been fraudulent or criminal activity, we do not believe the investors should have to bear the cost of investigation.” IFB also calls for the receiver to provide an open accounting of the costs of the investigation thus far, as well as an ongoing weekly accounting of the costs borne by the investors of Portus.
IFB is a not-for-profit professional association representing nearly 4,000 licensed independent financial professionals across Canada.