Norshield placed in receivership

Date: Thursday, June 30, 2005
Author: Jason Kirby- Financial Post

An Ontario judge has put Norshield Asset Management into receivership, stalling a deal that would have seen the embattled hedge fund manager sold to a Calgary company today.

The Ontario Securities Commission along with Quebec securities regulators asked the judge to appoint RSM Richter Inc. to be the receiver for Norshield and several related companies. RSM Richter had been working as a monitor at the Montreal money manager.

Shortly after Norshield barred investors from withdrawing their funds in early May after a run on redemptions, John Xanthoudakis, Norshield's CEO, announced the sale of its money management division to Aragon Investments Corp., a shell company set up just weeks earlier.

As recently as two days ago Ted Cantlon, president of Aragon, insisted the deal was set to close by the end of June.

But with the OSC's latest move, that seems impossible now. RSM Richter will take control of Norshield's assets, which would effectively block any sale.

Mr. Cantlon could not be reached for comment yesterday.

Beginning in May the OSC, Quebec's Autorite des marches financiers and the Mutual Fund Dealers Association undertook a review of Norshield's operations.

In a statement yesterday, the OSC repeated concerns raised as a result of the review that Norshield and its Olympus United Group Inc. division "were unable or unwilling to adequately explain the investment structure offered to clients and the flow and the location of client funds."

Norshield has blamed its woes on press coverage over efforts by Cinar Corp. to recover US$125-million it says was transferred to the Bahamas between 1998 and 2000. The children's animation company alleges Mr. Xanthoudakis played a key role in the affair. Norshield has denied the allegations.