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Winnipeg Free Press - PRINT EDITION

MSC settles with second-last Crocus director

By: Geoff Kirbyson

Posted: 06/26/2012 1:00 AM

THE Manitoba Securities Commission has reached a settlement with one of the two outstanding directors of the Crocus Investment Fund, bringing the nearly eight-year-old saga one step closer to the end.

The regulatory body has come to terms with Ron Waugh, an appointee of the provincial government, who spent a total of just 79 days on the Crocus board in late 2004.

"Unlike the other directors (who settled last October) he wasn't part of the group signing off on the share-value certificates each week," said Doug Brown, director of legal and enforcement at the MSC. "That put him in a slightly different category."

The eight directors who settled last October admitted to a number of allegations, including the fact that even though they knew a significant devaluation of shares was imminent, the board permitted sales and redemption of shares at prices vastly higher than the price that was being contemplated.

The sanctions against Waugh include trading restrictions on securities until Oct. 1 except in his own personal account.

The last remaining director is Robert Ziegler. whose hearing dates will be set shortly.

"It is still possible there could be a settlement at some point. Right now, nothing is imminent," Brown said.

Crocus, once the darling of Manitoba's venture-capital scene, ceased trading amid allegations of serious errors with the valuation process of its investee companies in December 2004. Since then, it has been the subject of a scathing report from the auditor general and a class-action lawsuit and was forced into receivership.

According to the most recent quarterly report by Deloitte, the longtime Crocus receiver, the fund still has $7.2 million in cash and equivalents, accounts receivable of about $3.8 million and its net carrying value of the remaining investee companies is approximately $8.4 million.

Last December, the receiver approved a $9-million distribution to 33,500 long-suffering Crocus shareholders. Two years earlier, the receiver approved a distribution of $54.7 million.

geoff.kirbyson@freepress.mb.ca

Republished from the Winnipeg Free Press print edition June 26, 2012 A6