Investors in failed Canadian hedge fund Portus Alternative Asset Management Inc., have sued PricewaterhouseCoopers, demanding the return of fees paid to the Big Four firm.Lawyers for the lead plaintiff in the proposed class-action lawsuit, which is being heard in Ontario Superior Court, said that Portus paid between $800,000 and $2.4 million in fees to PwC and two Toronto law firms. The suit specifically says the law firms -- Blake, Cassels & Graydon and McMillan Binch Mendelsohn -- should have released the fees they were being paid were illegal withdrawn from improper Portus accounts.
Founded in 2002, Portus was one of Canada's fastest-growing hedge funds, with about 26,000 customers and more than $700 million in assets. The Ontario Securities Commission sued Portus over questionable transactions in March 2005, and within a year the business was bankrupt. Trustee KPMG is still trying to track down an estimated $18 million missing from Portus accounts.
The scandal has lead Canada’s securities regulators to begin preparing the proposal of stricter rules to regulate hedge funds before the close of 2006.
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