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March 01, 2006 at 07:00 PM
TORONTO (HedgeWorld.com)–A series of disagreements about appropriate disclosure among the various entities working to untangle the collapse of the Portus Alternative Asset Management Inc. hedge fund has thus far held up progress, but several compromises may be in the works.
According to a report from KPMG Inc., the court-appointed receiver for Portus, after much back and forth, disclosure protocols have been worked out between Soci?? 1/2 t?? 1/2 G?? 1/2 n?? 1/2 rale Canada, KPMG, Northwater Capital Management Inc., and Manulife Financial that allow for sharing information.
The crux of the problem has been SG Canada’s reluctance to hand over data about the structure of its deals with Portus, data that each of the other entities wants for various reasons. SG Canada’s reasoning is that some of the information is proprietary and confidential and that its business could be hurt if any of it got out. SG Canada’s role in all this is that it issued C$530 million (US$462 million) in principal-protected notes that Portus offered to its investors. The returns for those notes are tied to the performance of hedge funds managed by SG Canada-related entities and by various third-party hedge fund managers.
KPMG wants Northwater to have access to all of the SG Canada-Portus information so that Northwater can conduct a cost-benefit analysis of hiring another investment manager to shepherd the SG Canada investments through to their maturities between 2008 and 2011.
Manulife is one of a number of investment advisers that referred clients to Portus. Manulife wants access to the SG Canada information so it can help KPMG piece together exactly where C$740 million in Portus assets are today. Manulife has already told clients it referred to Portus that it would refund their principal, and thus it is Manulife on the hook for the money its clients invested with Portus.
According to a report from KPMG to the court overseeing the Portus affair, SG Canada and Manulife have worked out terms for sharing information, overcoming an objection Manulife had to SG Canada’s position that it would not release some information it deemed proprietary and confidential. SG Canada subsequently backed off that position and agreed to Manulife’s terms.
A second adviser that referred clients to Portus, Berkshire Securities Inc., also wants information from SG Canada, but Berkshire has not yet agreed to terms.
