Could take years for investors to recover money

Also, LOM told KPMG that prior to March 20, 2004, the brokerage “would make book entries on behalf of various Portus group entities, either showing monies or shares being transferred through a series of brokerage accounts,” the report states.

However, “the receiver understands from LOM that there was no actual purchase or sale of Canadian securities in the market by LOM” on Portus’s behalf, the report adds. “ The receiver is seeking additional information on this issue.”

The so-called BancNote Trust series of offerings — there were 12 issued by Portus between July, 2003, and February of this year — were almost never properly documented, the KPMG report states. For instance, when Portus tried to have trust documents executed for the majority of the offerings, Computershare Trust Company of Canada refused to do so “due to inquiries in relation to [Portus] that were then being made by the Canadian securities regulatory authorities.”

It is understood that it could be years before investors recover their money from Portus. KPMG believes the best way to proceed is to pool the assets it has found, restructure the principal-protected notes that Portus bought on investors’ behalf into more liquid investments and then distribute the money to creditors.

The process will involve bankruptcy proceedings, a call for claims and meetings and negotiations with creditors. It is anticipated to be lengthy. For instance, it could be early next year before the first meeting of creditors is held.

Duff Young, a well-known fund analyst retained by Portus as a consultant before its collapse, has said he attempted to raise concerns about the firm with the Ontario Securities Commission as far back as December, 2003, but his telephone calls were not returned.

Wendy Dey, an OSC spokeswoman, said yesterday there is only a record of a call from Mr. Young about Portus in February of this year. That call was returned with a voicemail, she said. The OSC has spoken to Mr. Young about his claims and is waiting to hear back from him. Mr. Young has said he has notes that back up his claims.

Meanwhile, Mr. Manor has been accused of misappropriating millions of investors’ money by KPMG. Through his lawyers, he has insisted he is innocent and too ill to be interviewed by the receiver. There was little in KPMG’s latest report regarding his status or the receiver’s efforts in Israel.