Final settlement reached in Crocus Fund lawsuit
The last defendant in the class-action lawsuit over the failed Crocus Investment Fund has agreed to an out-of-court settlement, clearing the way for money to begin flowing to fund investors.
Wellington West Capital, the fund's lead underwriters, will pay $500,000 to receiver Deloitte Touche.
Bernie Bellan, one of the investors who spearheaded the lawsuit, said the receiver will now have about $73 million, and investors should see at least $5 per share.
"The amount is less than we might have hoped, but there are a number of factors that led us to accept that," he said. "One of the most important is that it now clears the way for the receiver … to distribute a good chunk of cash to Crocus shareholders without impediment."
The amount could increase to between $6 and $6.50, once the receiver has liquidated 26 other Crocus investments, Bellan said.
Bellan said the three-year fight over the money has been long, and the amount shareholders will receive will be less than he'd hoped, but it was still a battle worth waging.
"Someone had to step forward on this count. Crocus was getting away with all sorts of shenanigans. I called them on that, they threatened to sue me and ever since then I've been determined to see that the shareholders get their proper desserts," he said.
Bellan hopes the money will begin to flow this fall.
34,000 people invested $150M
Settlements were reached earlier this year with the provincial government, the Manitoba Securities Commission, brokerage firm BMO Nesbitt Burns, auditors PricewaterhouseCoopers, and the fund's former directors and officers. Those settlements totalled about $12 million, about half of that from the auditors.
Taxpayers will be on the hook for about $2.75 million through agreements with the government and securities commission.
About 34,000 Manitobans had more than $150 million invested in Crocus, a labour-sponsored venture-capital fund that had a mandate to invest in Manitoba companies.
Crocus stopped trading in December 2004 over concerns about the true value of its shares.
In April 2005, the fund dropped the value of its shares to just below $7 — almost one-third less than their value when trading was halted.
The fund went into receivership in June 2005.