Are advisors being blamed unfairly in Portus fiasco?

Investors weren’t the only ones looking for answers at first meeting of creditors of Portus Alternative Asset Management. Advisors, many themselves investors, feel hung-out to dry in the whole affair. For many, the meeting on Wednesday was their first opportunity to get some information, but many left frustrated by the lack of answers receiver KPMG was able to supply.

Carmine Mazzotta was one of the advisors hoping for more, especially having flown in from Ottawa for the day to hear what KPMG had to say. He wasn’t impressed. “I was expecting more than this,” he says. Then again, he says, information hasn’t been very forthcoming for sometime.

“When the shit hit the fan, KPMG said…we are not talking to you, you are the advisor, you are persona non grata,” says the investment advisor from Innovative Financial Group. “I couldn’t get any information on my clients; I couldn’t get any information on anything.”

Holding the meeting at the Ricoh Coliseum on the grounds of the Canadian National Exhibition in Toronto seemed apt, given the carnival-like atmosphere inside. It was a big show, with little substance, based on the opinions of those milling about in the corridors of the hockey arena.

The receivers, trustees and lawyers who gathered on stage baked under the heat beamed down from three spotlights tucked away in the rafters. Overhead, their image splayed for all to see on large screens built into the scoreboard for the hundreds of investors, proxyholders and advisors able to attend the meeting. The grey hair of many of those in the audience suggests many were at or near retirement.

And while the rest of the scoreboard remained dark through the four hour-long event, many of those in attendance know the score. To many, it favours KMPG given the millions it has already charged in fees. Meanwhile, investors feel like they’ve come away with nothing.

Admittedly, nothing is a bit of a stretch. As it stands it looks like investors could get as much as 86% of their investment back — some even think possibly more depending on how well the notes from Société Générale Canada perform if left to maturity. But KPMG, the receiver, is pretty confident the final figure will not exceed that amount, particularly when the receiver’s fees, with the threat of additional claims against Portus and lingering questions about the reliability of the third party information used to calculate that figure continue to change.

Boaz Manor, the company’s founder, is accused of destroying records, pocketing funds and converting some of the cash into hard to trace diamonds. He fled the country shortly after Portus was shut down. His case is slowly winding its way through Israeli courts, but there’s doubt as to whether he will ever stand trial in Canada. No one from Portus attended the meeting.

Clients were hurt, of that there is no doubt, but for advisors, their reputation has been damaged. Bruno Mucci, a managing partner with Aegon Dealer Services Canada in Mississauga, Ont., says the Portus mess has had a domino effect on his business as one client spreads the word to another five or six. “My credibility has gone down from 110% down to maybe 50%,” he says. “I’ve been fortunate that the clients have stayed with me, but I haven’t seen any more money from them.”