WEST PALM BEACH, FL (www.hedgeco.net) – Investors in Portus hedge fund have launched a class-action lawsuit against Manulife Securities Company. Peter Ormerod is bringing the civil action lawsuit,52, of Edmonton, Canada. According to news reports, Mr. Ormerod lost his $100,000 of his retirement savings in Portus fund, through an account being managed by Manulife Securities financial adviser.According to the court papers filed at the Ontario Superior Court of Justice, the Plaintiff alleges that �Manulife and parent firm Manulife Financial Corp. failed to adequately investigate the feestructure and safety of Portus hedge funds before steering its clients there.�
Investors who purchased hedge funds through the Portus Alternative Asset Management are suing the firm for $240 Million. Lawyers familiar with the case said, “The defendants’ failure to complete proper, reasonable and prudent due diligence pursuant to industry standards resulted in the class investing in risky and speculative investments which was inconsistent with the terms of the contract documents.� The lawyers for the plaintiff also said, �Manulife earned $10 million in fees through a referral agreement that saw it refer up to $240 million worth of its clients’ capital to Portus, which was targeted early last month by the Ontario Securities Commission.�
Manulife Financial said it was misled by Portus Alternative Asset Management. Portus failed to disclose the nature of such investments to Manulife. Furthermore the plaintiffs were not qualified as accredited investors according to Canadian law, and such investors must meet those guidelines before investing in highly speculative hedge fund vehicles.
Peter Jervis, a Toronto lawyer said Manulife Securities had a “heightened duty of care to protect its clients given the complexity of the investment, the unusual fee structure and the high-risk nature of hedge-fund investing. He added, “This was a very unusual, uncertain type of investment.”
Portus Asset management operates a “fund-of-hedge-fund” investment product, with $800 million in assets under management and 26,000 clients, mostly in Ontario.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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