Morningstar- The latest chapter in the sorry saga of the Portus group of companies was written last week. One of the two co-founders of the disgraced hedge-fund marketing machine was led away from aToronto courtroom in handcuffs to begin serving a two-year, plea-bargained jail sentence.
Beginning in early 2005, the Portus affair cast a pall on the entire Canadian hedge fund industry. The Portus companies had been a marketing success story. Working through independent advisors, they lured about 26,000 mostly Canadian investors to place an estimated $750 million in Portus products.
In terms of investment risk, the Portus products were ostensibly on the conservative side. Capital-protection guarantees — which remain in place today — enhanced their appeal to investors whose memories of a severe bear market were still fresh.
