Investors Settle Mutual Fund
Wealthy international investors, who lost millions in the failed Oracle Fund, 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 totalled 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 an 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.
Candia Dames, The Bahama Journal