Troubled Canadian Hedge Fund Took In C$700m

by Carla Johnson, Investors Offshore.com

23 March 2005

Newspaper reports in Canada suggest that troubled hedge fund Portus sent C$246 million to bank accounts in the Cayman Islands while regulators across Canada were already scrutinizing its operations.

The Globe and Mail quoted KPMG LLP, the appointed receiver for the suspended fund as saying. "We don't understand why there would be money flowing offshore," Bob Rusko, from accounting firm KPMG, told the Globe and Mail in a story published on Saturday. Attempts were also made to destroy corporate records, the Globe said, citing KPMG.

26,000 Canadians are thought to have invested C$730 million in the Portus fund. Last month, the Ontario Securities Commission blocked Portus from trading securities and paying out funds to clients as part of an investigation of the hedge fund.

Some investors were directed to Portus by Manulife Financial, a leading Canadian-based financial services company.
Manulife is reported to be offering some guarantees to such clients in the event of loss on their Portus investments. Class actions are said to have been launched by investors against both Portus and Manulife.

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