A settlement has been approved in Manulife Securities Investment Services Inc. v. Société Générale, Société Générale (Canada), Lyxor Asset Management and Société Générale Securities Inc.
Manulife Securities was the largest investor caught up in the collapse of Portus Alternative Asset Management (which went bankrupt in 2005), with an aggregate investment of about $246 million, as a result of having purchased its clients' investments in Portus through a formal offer to purchase. A lawsuit launched by Manulife Securities sought damages of $1.6 billion for negligence, breach of trust and breach of fiduciary duty, and $30 million in punitive damages.
By statement of claim issued July 4, 2006, Manulife Securities Investment Services Inc. commenced an action in the Ontario Superior Court of Justice against Société Générale and several related parties pursuant to the Class Proceedings Act, 1992. The action claimed damages, disgorgement, interest and costs for negligence, breach of trust and breach of fiduciary duty in connection with losses alleged to have been suffered by Manulife Securities and the proposed plaintiff class in respect of investments in units in variously numbered series of notes made through or held by Portus Alternative Asset Management Inc. and various related parties.
Société Générale (Canada) issued to Portus entities a series of principal-protected notes for an aggregate purchase price of approximately $529 million. These notes were guaranteed to pay, in the aggregate, a minimum of approximately $611 million upon maturity. The notes bore maturity dates ranging from September 2008 through December 2011, with the majority maturing by the end of 2009.
On November 20, 2008 the parties entered into a settlement agreement whereby it was agreed, among other things, that the defendants would pay, into the consolidated estate of the various bankrupt Portus companies, the sum of approximately $478 million, representing the accelerated re-purchase at face value of the then outstanding principal protected notes. It was further agreed that this amount would be distributed by the trustee of the consolidated estate to members of the plaintiff class.
Justice Colin Campbell approved the settlement on December 18, 2008 and granted judgment in accordance with the terms of the settlement agreement, thereby permitting distribution of the settlement proceeds to occur and thereby dismissing the action on a without costs basis.
Working on behalf of Manulife Securities, the representative plaintiff seeking compensation on behalf of a class of investors, were Jeffrey S. Leon, Eric R. Hoaken and Albert A. Pelletier of Bennett Jones LLP. David A. Hausman, Donald E. Milner, Jonathan A. Levin, Anil Aggarwal and Tracy A. Pratt of Fasken Martineau DuMoulin LLP acted as co-counsel for the plaintiff, Manulife Securities.
Ronald G. Slaght, Peter J. Osborne and Kris Borg-Olivier of Lenczner Slaght Royce Smith Griffin LLP acted as counsel for the defendants. James H. Grout and Larry Ellis of ThorntonGroutFinnigan LLP were counsel for the trustee of the consolidated estate.