The end is nigh for one of the most explosive political scandals in Manitoba history.
The road map for winding down the government-sponsored Crocus Investment Fund — which collapsed terrifically in 2004 — was recently approved by Manitoba’s Court of Queen’s Bench.
Justice David Kroft signed off Jan. 17 on the receiver’s plan for a fourth and final distribution of recovered funds to Manitobans who invested in the ill-fated fund two decades earlier.
After spending more than 34,000 hours working at liquidating and recovering assets held by the fund, Deloitte — the court-appointed receiver since 2005 — estimates $5.2 million will be left to distribute to shareholders. The accounting firm plans to keep $650,000 to cover costs related to administering the wind-down.
On the eve of the collapse in 2004, the share value was $10.45. Today, shares are valued at only $0.36.
Notices were published on Jan. 22, in both the Winnipeg Free Press and the Globe and Mail. In its most recent report, Deloitte says that if no objections are raised by Feb. 25 as a result of the public notices, it will “immediately commence the distribution.” Shareholders will then have six months or until Sept. 30 (whichever date is latest) to claim their entitlement.
All funds that go unclaimed — in addition to nearly $2 million in unclaimed funds from previous payouts — will be forwarded to the minister of finance and rolled into provincial coffers.
Crocus Fund history
The labour-sponsored Crocus Fund — designed to raise capital to support Manitoba companies — stopped trading in 2004, after nearly 12 years of activity, over serious concerns about share valuation practices.
About 34,000 shareholders invested more than $150 million in the fund before Crocus stopped trading. Investigations by the auditor general and RCMP followed, eventually leading to a successful class-action lawsuit against the province.
The collapse of the fund led the courts to appoint Deloitte as the receiver in 2005.
The accounting firm was charged with recovering and distributing what was left of the fund back to investors — at the time, about $64 million invested across 46 companies.
A lengthy legal stalemate with the hotel chain Canad Inns was finally resolved in 2019, which paved the way for the final payout.
As of Dec 31, the receiver resolved its operations related to all 46 of the original companies in which the fund held assets. In total, $65.7 million was recovered by the receiver.
Timeline of key events
July 1991
The Crocus Investment Fund is established with the adoption of the the Manitoba Employee Ownership Fund Corporation and Consequential Amendments Act.
January 1993
The fund first sells common shares to the public.
December 2004
Trading is halted over concerns about the valuation of its shares, trading at $10.45 per share at the time. More than 30,000 Manitobans are invested in the fund at this point.
April 2005
The fund drops the value of its shares to just below $7, almost a third less than their value when trading was halted. The devaluation amounts to a $46-million decrease in the fund’s net asset value.
May 2005
Manitoba’s auditor general releases a scathing report, accusing senior managers of the fund of mismanagement and misrepresentations.
June 2005
Deloitte becomes the court-appointed receiver charged with salvaging whatever value is left in the portfolio. RCMP launch an investigation into the events that led to the collapse.
July 2005
A group of Crocus investors file a $200-million lawsuit, citing the auditor general’s report as the basis for the statement of claim.
July 2008
RCMP say there was no evidence the collapse of the fund was caused by criminal misconduct. No charges are laid.
September 2009
The receiver makes a first distribution of recovered funds to shareholders worth $54.7 million. Shareholders receive another $6.8 million payout as a result of a class-action settlement.
December 2011
The receiver makes a second distribution of recovered funds to shareholders worth $9 million.
November 2014
The receiver takes Canad Inns to court, in hopes of dissolving and liquidating the hotel chain’s parent company to recover its investment.
December 2014
The receiver makes a third distribution to shareholders of recovered funds worth $8.6 million. Shareholders also receive a $700,000 payout as a result of another class-action settlement.
November 2019
The lengthy court battle with Canad Inns comes to an end. The courts compelled the hotel franchise to buy back its shares in the fund for $4 million, less than the original principal investment.
January 2022
The courts approve a final wind-down plan, with an anticipated $5.2 million final payout to shareholders.
September 2022
The proposed deadline for shareholders to claim their entitlement in the fund. Once complete, the receiver will be discharged of its duties and the Crocus Investment Fund will cease to exist.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
