Investorial

When something sounds too good to be true, it usually is! I’m not simply referring to my fib on April Fool’s Day, but I’d like to open a discussion about investors that are drawn to “The Titanic” of investments like moths to a flame.

The Titanic, thought to be the fastest ship afloat of her time and widely regaled as almost unsinkable. Yet, the infamous British liner sank on the night of April 14, 1912, after crashing into an iceberg in the North Atlantic Sea. The Titanic sounded too good to be true on her maiden voyage. But can you imagine the excitement of those passengers as they became the first to board this ship?

The Portus Titanic
Let’s bring this back to the world of investments. What about those first investors of a hedge fund called Portus? With no discernable track record, these investors gleamed with dollar bills in their eyes, smiling at the promise of sweet returns in both up and down markets, happily gave millions to a scheming co-founder who fled to Israel.

Another Titanic Scheme
I recently found another example of a investment scheme gone bad. Hidden in the pages of Canadian Business online lies an investigative report about (more…)

The Globe & Mail reports that a coalition of Canadian investment regulators have offered 55 investment firms that referred business to the scandal plagued hedge fund company Portus a settlement term. The terms were to repay the referral fees paid to advisors of said firms in exchange for dropping investigations against the firms and their financial advisors.

The deadline for firms to accept the offer is January 24th, 2006. Manulife has previously offered restitution proactively. 2 firms that have already accepted the terms of the proposal are Berkshire Securities (widely publicized during this scandal) and Aegon Dealer Service Canada Inc.

I feel this settlement offer is really generous and the advisors and firms involved are certainly getting away from this with a light slap on the hand! I predict that almost all the firms will accept the settlement terms by its deadline.

I know people who are part of the Aegon distribution channel and some have referred clients to Portus. It’ll be interesting to see if I can find out whether the settlement will be at the cost of the firms or if advisors have to be charged-back for the referral fees they earned themselves. You can also read my views on previous posts here.

Globe & Mail: Firms given option to repay Portus fees

I recently read an update on Portus. It reported that investors who were victims of the hedge fund company’s malfeasance could recover more than the previously estimated $0.62 on the dollar. I’m happy that these investors may look forward to receiving more settlement, but this unfortunate incident should not have happened in the first place.

You can call me an investment cynic, but I think everything is a scam until I educate myself about it. Portus was a hedge fund company who sold invesments via an offering memorandum with the help of many invesment distribution channels. Investment advisors, mutual fund and insurance sales representative who referred should bear a lot of the responsibilities for their actions. So far only Manulife has really come to say that they will make restitution to clients referred to Portus through their network.

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