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The co-founder of failed hedge fund Portus Alternative Asset Management Inc. has agreed to pay $8.8 million to settle a long-running case with the Ontario Securities Commission.
Boaz Manor, 38, has also agreed to a life-time ban from working in the financial industry or trading securities except within his RRSP.
The settlement was approved Monday by OSC vice-chairman James Turner.
Manor attended the hearing but did not speak. His lawyer, Robin McKechney, said his client is happy to have his legal issues resolved.
"This has been a very stressful time for Manor and he is absolutely relieved to put all this behind him and move on with his life."
The $8.8-million payment is an order to "disgorge" the value of long-missing diamonds that were mysteriously purchased with Portus money and then went missing after the fund's collapse.
Following the completion of Monday's hearing, McKechney said his client doesn't have the diamonds and can't afford to pay the ordered amount.
"Manor is not in possession of the diamonds and does not know their whereabouts at this time," McKechney said.
He said Manor hopes a court action he commenced in Israel against a party he believes now has the diamonds will lead to their recovery, enabling him to pay the order.
Manor received a four-year sentence in 2011 after pleading guilty to breach of trust and disobeying a court order in connection with the 2005 collapse of the Toronto investment firm. At its peak, Portus was one of Canada's largest hedge funds, investing more than $800 million for 26,000 investors.
Portus was shut down by the OSC in 2005 amid concerns that its money was not being invested as promised. Manor left Canada for Israel when the OSC stepped in to investigate, but returned in 2007 after the RCMP laid criminal charges against him.
After Portus's collapse, court-appointed receivers from KPMG recovered assets to pay back most of the investors' losses. Most of the recovered money came from payments by French bank Société Générale SA, which had guaranteed Portus notes.
At a court hearing in 2009, an Ontario Superior Court judge ordered a final repayment that would see investors ultimately recover at least 95 percent of their losses. Some investors recovered 100 percent of their losses if they also qualified to receive restitution from their brokerage firms under a settlement firms reached with securities regulators in 2006.
However, KPMG was never able to locate $9 million in diamonds from Manor, which remain missing. KPMG alleges the diamonds were purchased with Portus money that was transferred to accounts in Hong Kong, but Manor claims he does not have the diamonds and does not know where they are.
The receiver also alleged Manor took more than $3 million in cash from Portus, which was not recovered.
Manor claims he does not have the money. His lawyer told his trial last year that he is bankrupt. A 2009 receivership hearing heard he was working for a "family holding company" at the time with an annual income of $60,000.
The OSC case has been long-running because it was adjourned until after the criminal cases were completed. The commission reopened the case last summer following Manor's guilty plea in court in May 2011.
While the commission originally levelled both regulatory allegations and quasi-criminal charges in provincial court against Manor and Portus co-founder Michael Mendelson, the quasi-criminal case against both men was closed last year after Manor pleaded guilty to the criminal charges.
Mendelson pleaded guilty to one count of fraud in 2007 and was sentenced to two years in prison.
He now uses the name Mikael Meir and runs an executive coaching business. Although he was also named in the OSC case, Mendelson was not part of Monday's settlement with the commission.