Portus to remain in regulatory limbo

(February 16, 2005) Portus Alternative Asset Management will be under a regulatory cloud for at least three more months after the Ontario Securities Commission extended a temporary suspension against the hedge fund firm. A hearing was set for Thursday, but late Tuesday, the commission announced that the case would not be heard until May 17, as the investigation continues.

The delay comes as no surprise, considering the nature of Portus’ BancNote Trust products, a complex investment mix involving offshore investing and notes issued by a Canadian subsidiary of a French bank. In fact, there’s speculation that the commission will need even more time to figure out the structure and whether Portus is in violation of securities laws.

The order prevents Portus from taking on new client assets, opening new accounts, or redeeming investment funds to clients, except in the case of pre-authorized withdrawal plans. It also stops Portus and its president, Boaz Manor, from trading in securities.

The OSC says Portus appears to have contravened various sections of the province’s securities laws regarding record-keeping, selling practices and suitability, and “has failed to take adequate steps to remedy those breaches.” Other provincial regulators are also investigating Portus.

However, at this point, there’s no suggestion from the OSC that the capital invested in Portus is at risk and the commission points out in its release Tuesday that the notes, if held to maturity, will have a value of at least the principal invested.

Portus has about 26,000 clients, mostly in Ontario, and about $730 million in assets.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com