Hahaha! Canadian hedge fund 1.4 Billion in the red!

Discussion in 'Wall St. News' started by The Kin, Apr 27, 2005.

  1. landboy


    Financial community is small in toronto, so everybody knows everybody. These assholes will never work on the street again, and I hoep they go to jail, not exactly a bunch of standup guys.
  2. range


    Kin, thanks for the post. It is always interesting to see what can go wrong so it is less likely to happen to us.

    Here is the article:

    Portus bleeds $400 million in red ink
    Controversial fund owes Canadian investors $750 million

    KPMG finds $238 million in `unexplained offshore transfers'


    Controversial Toronto-based hedge fund Portus Alternative Asset Management is more than $400 million in the red once the company's assets are subtracted from its liabilities, according to documents from the firm's court-appointed receiver.

    Portus owes at least $1.09 billion, but has assets of only $664 million, according to a preliminary balance sheet provided by monitor KPMG LLP in court documents.

    According to the KPMG, Portus owes $750 million to Canadian-based investors, another $83 million to offshore investors, and another $12 million to secured and unsecured creditors. The company also has $238 million in "unexplained offshore transfers," according to the receiver.

    "We believe that there are other assets that have not been identified or secured as yet, so this is a very preliminary look. We are still in the process of searching," said a consultant to the receiver in an interview yesterday.

    The Toronto-based firm was shut down by the Ontario Securities Commission in February and prodded into receivership in March, while securities regulators across the country have been looking into the company's sales practices.

    While the receiver is still trying to determine its fiscal health, the preliminary statement shows the hedge fund is still short about 40 per cent of what it would need to pay off its debts.

    "The receiver is not yet certain of the total assets and liabilities of the Portus Group, due to factors including the complexity of the structure, domestic and offshore wire transfers and the deliberate destruction or removal of certain of the Portus Group's records," KPMG said in its latest receiver's report.

    "Consequently the receiver cannot yet determine the precise amount that will be available to satisfy the claims of investors."

    According to the report, Portus has $27 million in domestic and offshore cash, with another $106 million still in brokerage accounts. The bulk of assets are in Société Générale (Canada) bank notes of $529 million.

    Meanwhile, investors hard-struck by Portus may get some relief. The receiver is expected to ask an Ontario Court today for permission to distribute up to $10 million to investors facing financial hardship since the Toronto-based hedge fund company was shuttered by regulators.

    KPMG has said previously that the minimum recovery investors could expect was 62 per cent.

    "It would be just and appropriate for the court to authorize the receiver to take steps to address these hardship situations as soon as possible," said the report.

    "The provision of preliminary relief to those investors actually experiencing hardship would not unduly prejudice other investors."

    The hardship committee will have a three-person membership, including a representative of the receiver, representative lawyer and a third individual to be appointed by both the receiver and representative lawyer, according to court documents.

    The criteria for hardship would include clients who need cash to "provide the necessities of life" and have limited "alternative sources of funds available," according to KPMG. However, the maximum amount paid to any one investor will not be greater than 10 per cent of the investor's funds in the Portus Group.

    Also, in an effort to get a handle on how much money was distributed overseas, KPMG will ask the Ontario Superior Court for an order to compel Paul Ho, a former vice-president of sales and service at Portus, to provide information.

    KPMG is interested in the international sales team that Ho was a part of, with investors as far away as Hong Kong, Bermuda and Taiwan. The international investors "appear to have been referred" to the Portus Group through dealers located in Canada, said KPMG.

    However, when contacted by the receiver, "Ho advised that he had been instructed by management on Feb. 17 not to provide any information with respect to Portus to anyone. The receiver is of the view that Ho will not assist the receiver unless compelled to do so" by the court, said KPMG.

    At the top of the "must-see" list for KPMG is Portus co-founder Boaz Manor, who has been in Israel since March.

    "It appears that the only person that the receiver has identified thus far with a full understanding of the international investment structure is Boaz Manor," said KPMG, noting that despite a March 29 court order directing him to do so, "Manor has refused thus far to make himself available for examination by the receiver."

    Manor last contacted the receiver on April 19 by telephone and said he was in the process of hiring an Israeli lawyer and would advise the receiver this week on what his position would be concerning an examination by the receiver.

  3. good luck. one of them ran to isreal. just another bunch of wall/bay st crooks. not a surprise. plus this is canada,where criminals get nothing for murder so a little financial scam isnt going to get a whole lot even if they are convicted.
  4. The bigger assholes are the people who paid 15% management fees to get 4% returns
  5. You will see more hedge fund blow ups very soon.
    Especially the ones who shorted bonds and long S&P's and Nasdaq..
  6. Usually the ones that root against Hedge Funds are too unsophisticated or not wealthy enough to invest in them!!!

    Yes, there are always a few anomalies in any investment class and there is always risk of losing your investment. Would you be better off in a mutual fund that engaged in a market timing scandal?? Or in getting crap returns in T-Bills??

    People, wake up and realize that by selecting the RIGHT hedge fund, you can easily outpace the S&P 500 with significanltly less volatility.

    But then again you all know that, right?? Everyone here is an "elite" trader, lol :D :D :D
  7. landboy


    I hope you're kidding right? You're saying that it is the investors perogative to make sure the fund, that they risk hard-earned money on, doesn't break the law?

    I'm not advocating market timers either, we have it crappy in Toronto too, the OSC gave them a slap on the wrist.

    People should do their homework (due diligence) but no investor should be penalized because of fraud. Both instruments can be corrupt, but that does NOT mean hedge funds shouldn't get a bad wrap if they stray.

  8. Well, of course no one can foresee fraud occuring, BUT if you spend the time and money to do a background report on the manager ($1000-$3000) it certainly narrows the chances of getting screwed by a shady operator!!
  9. ktm


    That's probably the case here, note the "hahaha" in the thread title as if he's glad they blew up. Yeah, haha it sure is funny all those people lost their money isn't it?
    #10     Apr 29, 2005