Norshield suspends redemptions

(May 5, 2005) The hedge fund industry is raising eyebrows again, as Norshield Financial Group has temporarily suspended investor redemptions from its flagship Olympus Univest fund.

Norshield has said investors’ capital is safe, but that it requires 60 to 90 days to unwind some of its contracts to gain access to such a significant portion of capital. The hedge fund industry is already nursing a black eye, following the closure of Portus by regulators.

Investors have recently attempted to pull over $100 million out of the $300 million fund of hedge funds recently, as the parent company faces a court battle with animation firm Cinar, which was formerly held by the fund through its hedge fund holdings.

Cinar has since been taken private by other investors, but is itself embroiled in legal troubles with CRA over tax credits it had claimed. The firm says it is owed millions of dollars by an offshore management firm associated with Norshield’s chairman and CEO John Xanthoudakis.

Norshield has returned the favour, filing suit against Cinar for defamation of Xanthoudakis and the damage such defamation does to the fund company.

“The actions of Cinar and Mr. Voorheis constitute a flagrant abuse of process and have publicly defamed both Norshield and myself, placing at risk ongoing relationships with our stakeholders. It is time to set the record straight,” Xanthoudakis said in an April 29 press release. “Cinar has orchestrated an ongoing campaign of misstatements and innuendo to deflect attention away from their serious corporate governance problems.

Norshield and Xanthoudakis are seeking $10 million in damages from Cinar.

“As Norshield manages other people’s money, we have always believed in the need to respect confidentialities,” he said. “But we have allowed our good name to be unfairly and severely tarnished for far too long.”

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