HK investors suffer huge losses in bets through Cayman Islands firm
Investigation into Cayman Island investment firm reveals large losses for its Hong Kong and overseas clients as a result of hidden charges.
An investigation by the South China Morning Post into a US$670 million Cayman Islands investment firm has revealed large losses for some of its Hong Kong and overseas clients.
The probe into Porton Capital, a venture capital investment advisory firm run by Dubai-based businessman Harvey Boulter, focused on an apparent mismatch between prices investors paid for shares in fledgling technology companies promoted by Boulter, and the actual issue prices recorded in the companies' annual accounts.
One client, who requested anonymity, told the Post he had lost up to 90 per cent of his investment to hidden upfront charges.
Porton acts as an intermediary between start-up technology firms and wealth management firms. Investors take a high-risk bet that the technology firm strikes gold and goes public, or is bought for a hefty premium.
When asked, Boulter explained that Porton created a spread - a difference in price between what Porton paid for the shares and what investors then paid Porton - of between 15 and 20 per cent to reward the financial advisory firms that sold Porton products.
The commissions were "material" but "normal in any market", he said. Any suggestion that clients paid more than 20 per cent was "completely wrong".