Securities: Director attaches Terms and Conditions to Registration of Portus Alternative Asset Management Inc.

Securities

Director attaches Terms and Conditions to Registration of Portus Alternative Asset Management Inc.

IN THE MATTER OF THE SECURITIES ACT R.S.P.E.I. 1988, CAP. S-3 AS AMENDED (THE “ACT”)
AND
IN THE MATTER OF PORTUS ALTERNATIVE ASSET MANAGEMENT INC.

TERMS AND CONDITIONS ON REGISTRATION

Subsection 3(4)

WHEREAS Portus Alternative Asset Management Inc. (Portus) is registered under the Act as an Adviser in the category of Investment Counsel/Portfolio Manager;

AND WHEREAS the registration of Portus is under review by the Registrar of Securities;

AND WHEREAS it appears to the Director that:

1. At present, Portus has opened managed client accounts for approximately 26,000 clients across Canada. Over 60 of these clients are resident in Prince Edward Island. Portus appears to be selling to all clients the same portfolio of securities. Each portfolio contains securities which are held and/or traded to mimic the performance of BancNote Trust mutual funds, non-prospectus mutual funds which Portus also manages.

2. Portus Asset Management Inc. (“PAM”) created the BancNote Trust funds. PAM is not registered with any securities regulatory authority in Canada. Portus acts as the Investment Adviser of the BancNote Trust.

3. Portus receives approximately $20 million of new investment funds or assets from a combination of existing and new clients each week.

4. Portus has approximately $800 million under management at present. Approximately $2 million of these funds are from Prince Edward Island clients.

5. Portus has created the impression through direct and indirect misrepresentation that clients are purchasing units of BancNote Trust funds with a bank guarantee of the principal at maturity. No client portfolios were structured to contain the BancNote Trust fund units.

6. Portus appears to have contravened section 28 of the Act (as section 28 relates to fraudulent acts through section 1(j) and (o) of the Act) and sections 37, 38(1) and (3) and (4), and 38.2(6) of the Securities Act Regulation (EC 165/89, as amended), and, to date, has failed to take adequate steps to remedy these breaches.

7. The conduct referred to above appears to be contrary to the public interest.

AND WHEREAS the Director is of the opinion that it is in the public interest to immediately attach terms and conditions to the registration of Portus while continuing to review the registration of Portus;

THE DIRECTOR HEREBY attaches the following terms and conditions to the registration of Portus as an Adviser in the category of Investment Counsel/Portfolio Manager pursuant to subsection 3(4) of the Act:

(a) Effective immediately, Portus shall not open any new client accounts;

(b) Effective immediately, Portus shall not accept any new funds or other assets for investment in respect of any existing client accounts; and

(c) These terms and conditions are in addition to and do not replace any other specific terms and conditions that currently apply to Portus and Portus continues to be subject to all applicable general terms, conditions and other requirements contained in the Act and any Regulations made thereunder.

DATED at Charlottetown this 2nd day of February, 2005

Edison Shea, FCA
Director