Investors
Settle Mutual Fund
23/01/2004
Wealthy
international investors who lost millions of dollars in the failed Oracle Fund
have reached a settlement with the fund's administrator, bringing to a close
another chapter in the much-publicized debacle.
Attorneys
representing the investors were before the Supreme Court this week seeking to
recover millions of dollars in losses suffered as a result of the collapsed
fund.
The
announcement of a settlement between the Hong Kong Shanghai Banking Corporation
(HSBC) and Fortis Fund Services (Bahamas) Limited, formerly Mees Pierson, which
administered the fund; and another settlement between Union Bank of Switzerland
(UBS) and Fortis was made before Justice Hugh Small Thursday afternoon.
But
details regarding the settlement are being kept confidential.
The
case is set to continue in the Supreme Court next Wednesday as Hunter Douglas,
a home products corporation, another major investor in the fund, continues with
its action.
The
$257 million Oracle Fund was registered on February 26, 1997 as an authorized
mutual fund but collapsed in 2000, with the blame resting at the feet of
Fortis.
The
investors accused Fortis of "misrepresentation and breaches of statutory
duty" which allegedly resulted in the fund losing a substantial amount of
money.
Losses
reportedly totaled at least $160 million.
Investors
soon began demanding their money after the Securities Commission determined
that Fortis carried on the business of administering the Oracle Fund "in a
manner which was prejudicial to the investors and/or creditors of the said
Mutual Fund."
There
are two actions being heard simultaneously before Justice Small regarding this
matter.
In
a yet another action, the liquidators in the matter sued the fund's director
and administrator and reached a settlement last year.
After
the Commission ordered that Fortis discontinue administering the fund, smaller
investors joined larger investors from around the world in filing complaints to
the Commission.
Several
years after the collapse, shareholders were still fighting over some of the
money recovered by the liquidators.
The
Commission had also issued an order preventing Fortis from licensing any
additional funds. Plaintiffs claim that
Fortis did not follow investment guidelines, which led to the Oracle collapse.
The
administrator reportedly made poor investments, a source on the Securities
Commission at the time of the collapse told the Journal.
The
fund was reportedly suspended because there was a problem regarding the
valuation of its assets.
Past
Journal investigations indicated that Fortis invested in a New Jersey-based
company known as the Breen Capital Group, which issued promissory notes. The
company then reportedly bought tax lien certificates with the intentions of
fulfilling its obligations to pay off the debt. But that investment proved to
be a bad one, the Commission determined.
The Commission source said during the time of
the collapse that regulators had determined that a "financial blow up of
monumental proportions" was brewing.
