Manulife sues Portus banker

A class action suit has been filed by Manulife Securities International against the French bank Société Générale over its role in the Portus fiasco.

The suit names Société Générale, Société Générale (Canada), Lyxor Asset Management and Société Générale Securities Inc., with all Portus investors being represented in the class. Société Générale was named as the provider of the guarantee on Portus’s principal protected notes.

The class action would see the plaintiff’s decrease the value of their claim against Société Générale to match any distributions from the estate of Portus, although Manulife says it would not let the French bank off the hook altogether.

Société Générale (Canada) promptly issued a press release denying the allegations in the claim, saying it had “acted properly and has fulfilled all of its obligations in the Portus affair.”

SocGen assures investors that the principal protected notes that it sold to Portus are still safe and, at maturity, will be worth at least $611 million.

In a swipe at Manulife, SocGen said in a press release, “Société Générale did not sell investments to Portus investors, refer customers to Portus, or make recommendations to Portus investors. Conversely, Manulife’s professional investment advisors recommended Portus investments to their clients and were paid commissions by Portus for sourcing these investments.”

On February 15, 2007, KPMG, the trustee for the Portus estate, announced that it would make an additional distribution of capital to all investors, within the following six to 12 months. KPMG has sent out a letter to all investors, seeking delivery instructions for the distribution, setting a deadline of March 30, 2007, for a reply.

Portus has been in receivership since February 2005, after the OSC launched an investigation into the firm. Manulife Securities agents were among the largest source of referrals to Portus, and in March 2005, the company announced it would return 100% of the principal to investors.

“From the outset, [Manulife Securities] has committed to do the right thing for its clients and to do what it can to assist all Portus investors in minimizing their losses from the unfortunate situation surrounding the collapse of Portus,” said J-P. Bisnaire, senior executive vice-president, business development, and general counsel of Manulife Financial, in a release.

Bisnaire said that Manulife was not seeking to profit from the suit and that the firm would return all proceeds to investors.

The action will be dealt with on the Commercial List of the Ontario Superior Court in Toronto.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com