Home Breadcrumb caret Industry News Breadcrumb caret Industry The Portus Files Once one of the fastest-growing fund companies in Canada, Portus has been a three-year nightmare for advisors and 26,000 investors. When it was ordered to stop selling what were marketed as principal-protected notes whose upside would depend on a portfolio of hedge funds, Portus had collected $790 million in client money. That was in February […] By Staff | November 22, 2007 | Last updated on November 22, 2007 3 min read Once one of the fastest-growing fund companies in Canada, Portus has been a three-year nightmare for advisors and 26,000 investors. When it was ordered to stop selling what were marketed as principal-protected notes whose upside would depend on a portfolio of hedge funds, Portus had collected $790 million in client money. That was in February 2005. Only slowly did it come to light that clients hadn’t bought individual principal-protected notes but that, instead, investor money was commingled to purchase notes collectively, with maturity dates extended to 2011. More than that, Portus deducted $109 million off the top to pay its own expenses, leaving only $529 million invested. Things got murkier when co-founder Boaz Manor left Canada for Israel. Portus receiver KPMG found that $50 million in U.S. client money had never been invested. The receiver recovered some of it, but $17 million is still unaccounted for. Now, Portus principal Michael Mendelson has pleaded guilty to fraud, in part for using investor money to finance Portus’s operations. Manor is out on bail. The hedge fund investments have a maturity value of $611 million, and KPMG is exploring whether an early redemption is possible. KPMG has also begun paying noteholders cash based on the more than $150 million in uninvested money it has recovered. Below is an index of Advisor.ca’s coverage of Portus since the OSC shut the firm down on February 3, 2005. 2009 / 2008 / 2007 / 2006 / 2005 2009 December 8: Portus case crawls toward resolution 2008 December 23: Manulife settles with MFDA over Portus referral fees November 26: SocGen settles on Portus suit April 18, 2008: Portus notes “a bad investment” April 17, 2008: Portus receiver gets little help from SocGen 2007 October 30, 2007: Manor ordered to return to Toronto September 26, 2007: Portus founders charged with fraud July 27, 2007: Some Portus money to flow in the fall June 29, 2007: Some Portus investors may cash in soon May 18, 2007: Manor says Portus money “a fantastic story” March 8, 2007: Manulife sues Portus banker 2006 July 12, 2006: Portus receiver to seek MNPF investors June 23, 2006: Are advisors being blamed unfairly in Portus fiasco? June 21, 2006: Portus investors still in the dark on timing of refunds June 19, 2006: Portus investors to get back more than expected June 12, 2006: Some Portus investors could soon be repaid June 2, 2006: First Portus cheques in the mail April 26, 2006: IFB working on Portus fee repayment plan for insurance advisors April 25, 2006: OSC lays more charges in Portus probe April 17, 2006: Receiver finds nearly $600,000 intended for Portus April 10, 2006: KPMG releases Portus docs, sends claims requests to investors March 24, 2006: Portus put into bankruptcy March 16, 2006: KPMG seeks trusteeship in Portus bankruptcy January 31, 2006: Dealers agree to return Portus fees January 26, 2006: Portus refund may need more time January 13, 2006: Dealers to reimburse Portus referral fees 2005 November 29, 2005: Some Portus investors saved at the last minute November 15, 2005: High-profile lawyer representing Portus co-founder November 1, 2005: OSC starts limited market dealer sweep October 26, 2005: Portus founder ordered to remain in Israel October 14, 2005: Hedge funds could benefit from transparency: author October 5, 2005: OSC moves against Portus September 20, 2005: Receiver details Portus investments, recommends bankruptcy September 12, 2005: OSC “fishing” after Portus: lawyer July 4, 2005: Survey finds support for hedge regulation after Portus June 14, 2005: Hedge funds look at marketing promises May 27, 2005: IDA weighs in on hedge funds, referrals May 19, 2005: Avoiding litigation: tips from the experts May 10, 2005: Brown: You can’t sell what you can’t understand May 4, 2005: Berkshire communicates to clients on Portus April 21, 2005: Think carefully before referring, lawyer warns April 18, 2005: Investors should not pay for Portus probe, says IFB March 31, 2005: Manulife announces details of Portus guarantee March 30, 2005: Manulife standing behind its customers, says CFO March 24, 2005: Portus tried to destroy data, investigator says March 17, 2005Portus fallout: How advisors have been affected March 8, 2005: Portus fallout part 3: The blame game March 7, 2005: Helpline established for Portus clients March 4, 2005: Cold comfort: Manulife still facing questions over Portus March 3, 2005: Portus fallout part 2: The irate investor February 22, 2005: Portus fallout: Dealing with worried clients February 18, 2005: Advisors wary as Portus lays off staff February 16, 2005: Portus to remain in regulatory limbo February 11, 2005: Portus hit with further regulatory restrictions February 10, 2005: Analysts question latest move by Portus February 3, 2005: Portus temporarily shut down by OSC Have your say. Click here to comment on the Portus affair in the Advisor.ca Forum. (11/26/07) Staff The staff of Advisor.ca have been covering news for financial advisors since 1998. Save Stroke 1 Print Group 8 Share LI logo