Two more senior executives have departed Manulife Securities International Ltd. in the wake of the brokerage firm's ties to collapsed hedge fund Portus Alternative Asset Management Inc.
Bruce Norgren, who served as chief compliance officer, and Michael Novak, chief legal counsel, both left Toronto-based Manulife Securities within the past three weeks. Company spokesman Tom Nunn confirmed the latest personnel changes yesterday, but declined further comment.
The shakeup follows news last week that Manulife Securities president and chief executive officer Greg Gray had left the firm along with the manager of investment research, Jeff Plate.
Manulife Securities struck a referral arrangement with Toronto-based Portus in August, 2003, and played a key role in the hedge fund's rapid growth. Portus had more than $800-million in assets and 26,000 investors last March, when it was forced into receivership by the Ontario Securities Commission.
The OSC charged Portus co-founder Boaz Manor last week with violating provincial securities laws, and filed formal allegations against three other former Portus executives.
Portus did not sell its product directly but relied on referrals from outside salespeople. Manulife Securities and its 300 independent advisers referred 8,300 clients, who invested a total of about $235-million.
"I don't think it would be appropriate for me to comment on the nature of the parting," said Mr. Norgren, when reached at his home yesterday. The 44-year-old had served since 1999 as chief compliance officer at the brokerage, a subsidiary of Toronto-based Manulife Financial Corp.
Calls to Mr. Novak and Mr. Gray were not returned. Last week, Mr. Plate said he and the company had come to a "mutual understanding."
Manulife Financial has guaranteed the client investments, and the insurer took a $40-million Portus-related charge in the first quarter. At the time, CEO Dominic D'Alessandro called it a "wakeup call" for Manulife Securities, and said the subsidiary should have done a better job reviewing Portus funds.
Other mutual fund firms and investment dealers, including Burlington, Ont.-based Berkshire Group of Cos., which referred 2,300 clients to Portus, have asked their independent agents to return fees they received for referring clients to the hedge fund. The disgorgement is voluntary, and Berkshire has not guaranteed client investments.
The charges filed against Mr. Manor last week are "not the end of it," according to OSC enforcement director Michael Watson. He said the commission has broadened the investigation to include the dealer network that referred clients to Portus.
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