The independent financial Brokers of Canada is tracking down insurance advisors and managing general agencies in Ontario that received commissions and fees for selling products on behalf of Toronto-based Portus Alternative Asset Management Inc.

The IFB is proposing to negotiate an agreement with the Ontario Securities Commission on behalf of affected Ontario insurance professionals, whether they are IFB members or not, says Susan Allemang, director of regulatory affairs at the Mississauga, Ont.-based IFB.

In return for advisors voluntarily refunding commissions or fees to clients, the IFB wants to strike a deal with the OSC that the latter will not pursue further investigations or prosecutorial proceedings.

The agreement would be similar to the one the Investment Dealers Association of Canada and the Mutual Fund Dealers Association reached with the OSC earlier this year.

The essential terms and conditions of that agreement required dealers to participate in regulatory studies relating to fee arrangements and non-mutual fund products, and enact and comply with practices, policies and procedures to reflect the findings arrived at in the course of conducting the regulatory studies.

The IFB expects that continuing education about the pitfalls of referral-fee arrangements will become part of the final terms and conditions of any agreement it reaches with the OSC.

Allemang says the IFB has received requests from many of its members to see whether an agreement similar to that reached by the two self-regulators could be reached on their behalf.

“Once it became known that securities and mutual fund dealers came up with an agreement with the OSC, we started getting calls from people on the life insurance side who sold Portus,” she says.

The IFB subsequently conducted a survey of its members, which confirmed members’ interest in pursuing an agreement.

The IFB’s initial meeting with the OSC took place in March. After that meeting, the IFB decided to broaden its efforts to include non-IFB members in a possible agreement.

Since then, the organization has attempted to compile a list of interested participants. Anyone who sold Portus products has had to register with the OSC, says Allemang.

After sending out more than 300 letters, the IFB is receiving some replies. In the time since Portus was active, says Allemang, some managing general agents have merged or moved. And some MGAs have told the IFB that they worked out a deal for their insurance advisors when the MFDA agreement was reached.

The IFB is asking interested parties to e-mail the association to indicate interest in reaching an agreement with the OSC. The address is portusupdates@ifbc.ca.

Allemang says some respondents have said: “Count us in.” Others, however, have simply replied: “Keep us up to date.”

The IFB, nevertheless, intends to form a representative committee that would proceed with negotiations with the OSC. “Once we have a representative group, we will put a working committee together. It will draw up an agreement and go back to the OSC,” Allemang says.

The IFB hopes this won’t be a lengthy process, as it will be able to use the investment/mutual fund dealers’ agreement as a model.

Allemang notes that any agreement reached with the OSC will not mean that advisors who sold Portus products will be immune from civil suits. If a client has a case, she says, an agreement would not preclude that client from pursuing it.

The OSC moved against Portus in March 2005. Shortly after that, an Ontario court ordered accounting firm KPMG LLP to track down and seize Portus’s assets.

Criminal charges and regulatory allegations have been brought by the OSC against Portus founders Boaz Manor and Michael Mendelson. Manor is in Israel and under investigation by the RCMP.

In late June, KPMG reported that investors may get back 86% of their funds, which is much more than was originally expected, and held its first meeting with investors in a Toronto hockey rink.

Nothing came out of that meeting that would affect advisors, Allemang says. But, she adds, “There is interest on all sides in getting Portus wrapped up.”

At this point, the OSC refuses to comment on the IFB initiative. However, the IFB is pushing forward. Allemang says it hopes to have an agreement to take to the OSC within the next few months. IE