Briefly: “More Portus money to flow” and more of Thursday’s news

There was a time, long before Bernard Madoff took over the headlines, when the collapse of Portus Alternative Asset Management was considered a major case. Today there is some good news for investors in the failed hedge fund company.

KPMG, the bankruptcy trustee for the Portus estate, has begun mailing out cheques to about 19,000 investors. This latest disbursement represents a return of 62 cents on each dollar of principal.

Combined with two prior disbursements, investors have now recovered about 92 cents on the dollar.

“Pending resolution of some estate administrative issues, there is also likely to be a small final allocation as well, though the amount and timing of this has yet to be determined,” said Robert Rusko, senior vice-president of KPMG Inc. “This is an extremely positive result for investors, especially given the scope and complexity of the Portus failure and bankruptcy.”

Ironically, even without any additional distributions, the 8% loss posted by Portus investors may be the envy of many investors.

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IA Clarington closing two Sarbit funds

IA Clarington Investments has announced plans to merge the Sarbit Money Market Trust and Sarbit Canadian Bond Trust into its overall IA Clarington fund family.

The two funds will be folded into the IA Clarington Money Market Fund and IA Clarington Bond Fund, respectively, effective April 17, 2009. The result will be to decrease fees paid by investors in the Sarbit funds.

Investors will still be able to switch assets from other Sarbit funds into the closing funds until April 9, 2009, after which only systematic investment plan contributions will be accepted.

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Sun Life nominates director

Sun Life Financial has named James H. Sutcliffe to the board of directors, effective February 10, 2009. He will face shareholder approval for the appointment at the insurer’s annual meeting on May 21, 2009.

Sutcliffe retired as group CEO of Old Mutual plc, an international savings and wealth management company, in September 2008. Prior to joining Old Mutual in 2000, he was a senior executive with Prudential plc.

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CIBC Mellon named ABCP custodian

CIBC Mellon has been appointed as custodian in the restructuring plan for $32 billion in the illiquid non-bank sponsored asset-backed commercial paper (ABCP) market.

In the initial phase of the restructuring plan, the firm provided depositary services for the exchange of short-term ABCP for new long-term notes.

In its new role as custodian, it is responsible for the custody of asset pools held by the newly created trusts, including Master Asset Vehicles (MAV) I, II and III.

“We worked closely with the Pan-Canadian Investors Committee throughout the restructuring to ensure that we could provide solutions that benefitted all participating parties in this highly challenging transition,” said Thomas C. MacMillan, president and CEO at CIBC Mellon.

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Writedowns, ABCP Hurt Canaccord

Canaccord Capital posted its second loss in as many quarters due to writedowns and a bailout of asset-backed commercial paper investors.

Canaccord, Canada’s largest independent brokerage by assets, says the 2008 fourth-quarter net loss was $62.4 million compared with net income of $15 million a year earlier.

“The rapid deterioration of business volumes driven by the worst economic environment in generations had a material and negative impact,” said Paul Reynolds, chief executive of Canaccord, in a statement.

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Job cuts crush U.S. consumer confidence

Massive job losses have driven U.S. consumer confidence to an all-time low in February, according to the RBC CASH (Consumer Attitudes and Spending by Household) Index.

For the first time since it was launched seven years ago, the index reading is now in single digits, at 1.6, compared to a reading of 13.3 in January.

“The continued decline of consumer confidence comes in the face of rising unemployment and reports of big layoffs by major employers,” said Marc Harris, co-head of Global Research, RBC Capital Markets.

That does not bode well for the March reading, as the U.S. Labor Department reported 623,000 new unemployment claims (seasonally adjusted) so far in February. There are now 6.3 million Americans on the roll of the unemployed, which does not include those whose benefits have run out, or are no longer seeking work.

“Consumer confidence and economic recovery are in a chicken-and-the-egg situation. The economy can’t begin to recover without people spending and investing,” Harris adds. “Yet without signs of recovery, consumers and investors will stay on the sidelines.”

(02/12/09)