SocGen settles on Portus suit

Manulife Securities Investment Services has reached a settlement in its class action suit against Société Générale (Canada), over the bank’s role in the collapse of Portus Alternative Asset Management Inc.

While SocGen continues to deny all of the allegations in the suit, it has agreed to repurchase the deposit notes underlying the Portus investments currently held by Portus’s bankruptcy trustee, KPMG. The notes are being bought back for $611 million, their face value if they were held to maturity. Some of the notes would not have matured until 2011.

The settlement is subject to court approval which will be sought at a hearing in the Superior Court of Ontario — Commercial list on December 18, 2008.

Manulife Securities had filed suit against Société Générale, Société Générale (Canada), Lyxor Asset Management and Société Générale Securities Inc., in March 2007. Société Générale had been named as the provider of the guarantee on Portus’s principal protected notes.

In March 2005, Manulife president Dominic D’Alessandro promised that his firm would guarantee the recovery of 100% of the principal invested in Portus. Manulife advisors had referred $240 million in client money to Portus before the hedge fund company went bust.

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For a quick refresher on the case, check out The Portus Files.