Introduction

On December 10, 2004, the Manitoba Securities Commission halted trading in shares of the Crocus Investment Fund, the province’s largest labour-sponsored investment fund. Share value had peaked at $15.39 in July 2000 but steadily declined until the trading was halted. At last word, the value was believed to be less than $7 per share, but redemption remains impossible for the 33,000 investors who have poured nearly $200 million into the fund.

On April 4, 2005, the Manitoba Securities Commission laid charges against ten present and former Crocus Fund directors for failure to act in the public interest when stating portfolio values. On May 30, 2005, Manitoba’s Auditor General released his 245-page Examination of the Crocus Investment Fund, citing serious flaws in the Fund’s oversight, procedures, management, and marketing:

"This is an unfortunate example of what can happen when you have a Board of Directors that lacked appropriate oversight and governance. The Board of Directors and Senior Officers, namely the former Chief Executive Officer, the former Chief Investment Officer, and the Chief Financial Officer, failed to fulfill their responsibilities to CIF. This may have contributed to the production of misleading financial statements, prospectuses, and overstated share price valuations."

A class action was filed for shareholders in July, 2005. In January 2006, the shareholders’ lawyers were removed due to a potential conflict of interest. Klein Lyons has been retained to take over the case. Assisting us on the case are Winnipeg lawyers Jay Prober and Norman Boudreau.

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