Investors who purchased hedge funds from troubled Portus Alternative Asset Management Inc. have filed a $240 million class-action lawsuit against Manulife Securities International, the dealer that recommended the investment.

The class-action lawsuit was filed March 1 by Peter Ormerod, an Edmonton investor who sank $100,000 in the Portus fund through an account managed by a Manulife Securities financial adviser.

Ormerod alleges in a statement of claim filed with the Ontario Superior Court of Justice that Manulife and its parent company Manulife Financial Corp. lacked due diligence in investigating the fee structure and safety of Portus hedge funds before recommending the investment to its clients.

Manulife earned $10 million in fees through a referral agreement that directed $240 million worth of clients’ capital to Portus, before it was targeted last month by the Ontario Securities Commission, the plaintiffs claim in a release issued by their lawyers.

Manulife Financial reportedly said yesterday that it was misled by Portus about the nature of the investments being made on behalf of its clients.

The statement of claim paints a picture of an offshore scheme designed to enable Portus to avoid Canadian securities regulations that restrict what type of investors may invest in high-risk hedge-fund products.

The plaintiffs “were not qualified or accredited investors to invest in high risk and highly speculative hedge fund investments like those made by the Portus Fund,” the statement of claim says.

Portus was also entitled to charge “excessive and egregious” management fees, commissions and referral fees “significantly above those considered prudent, fair or reasonable” by industry standards, according to the claim. As a result, Manulife ought to have known it was “virtually impossible and totally unrealistic,” given market conditions and the fees being levied, for investors to realize any return on their investment capital, the claim says.

Allegations in a statement of claim are unproven in court.