An Ontario Securities Commission panel has concluded that two former executives of collapsed hedge fund Norshield Asset Management (Canada) Ltd. knowingly misled investors, failed to keep proper books and made misleading statements to investigators.
The moral of the story - always watch your finances!
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OSC RULES NORSHIELD MISLED INVESTORS
TORONTO – Two former executives of collapsed hedge fund Norshield Asset Management (Canada) Ltd. knowingly misled investors, failed to keep proper books and made misleading statements to investigators, an Ontario Securities Commission panel has concluded. The OSC panel said former CEO John Xanthoudakis and president Dale Smith breached Ontario Securities Act rules while running the $1-billion hedge fund.
Norshield collapsed in 2005 after receiving a flood of requests for client redemptions. The OSC said the executives lost at least $159-million invested by 1,900 retail investors in Canada, alleging that they did not reveal the true nature of its investment structure and did not inform investors about the true value of their holdings. The OSC hearing panel ruled that the company's calculations of the value of its investment units were artificially inflated in 2004 and 2004, giving investors a false impression about the success of the hedge fund. "Xanthoudakis and Smith were fully aware of this." The OSC said Norshield, its fund company and the two executives "failed to deal fairly, honestly and in good faith with investors." Alistair Crawley, who represents Xanthoudakis and Smith, said declined to comment and did not confirm if his clients intend to appeal the OSC decision. OSC staff also alleged the companies never prepared audited financial statements for most of their corporate entities after September, 2003, and no books or records have been produced showing the flow of funds through the Norshield investment structure.
SOURCE: Lawday
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