Manulife announces details of Portus guarantee

By Doug Watt | March 31, 2005 | Last updated on March 31, 2005
2 min read

(March 31, 2005) Manulife Financial is offering clients who were referred to Portus three options to recover 100% of the principal invested in the hedge fund firm, currently under investigation by the Ontario Securities Commission.

Clients whose Manulife advisor referred them to Portus can exchange their investment for either a guaranteed principal-protected note, a GIC, or a cash payment. The note and the GIC have been specifically created by Manulife for Portus clients.

“We hope that these options provide our clients with peace-of-mind, despite the fact that the investigation into Portus and resulting legal actions are far from complete,” says Manulife president Dominic D’Alessandro.

In February, the OSC froze the assets of Portus and later appointed KPMG as a receiver. “The receiver has yet to determine the extent to which funds are likely to be recovered from Portus,” D’Alessandro said in a letter to clients. “The investigations and resulting legal action will likely take several months to conclude. Based upon the information Manulife has received to date, it is our view that you would likely receive less than 100% of your of your investment if Portus was liquidated in the next several months.”

“In the unlikely event that the ultimate net realization from your Portus investment exceeds the principal amount, we will credit you with such excess.”

Clients who choose the first option will receive a five-year principal-protected note, guaranteed by BNP Paribas, invested in a portfolio comprised of the Manulife Growth Asset Allocation Fund and the Manulife Canadian Universe Bond fund.

Manulife will pay an upfront 4% sales commission to advisors whose clients opt for the note.

Those who select the GIC will receive an interested rate at least 10 basis points higher than comparable products offered by Manulife, the insurer says.

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  • A formal offer will be sent to Manulife clients before the end up April, which expires on July 15. Clients will also be asked to release Manulife from any legal obligations, including any class actions against the firm.

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    Doug Watt