It could take a number of years to get to the bottom of what happened to the Bermuda-based scandal-hit Manhattan Investment Fund, according to company's receivers.

The hedge fund, which was registered in the British Virgin Islands but was administered and audited by Bermuda companies, admitted in January that it had lost $500 million after previously claiming it had made massive profits.

The scandal was unearthed after Deloitte & Touche LLP, the Bermuda auditors of the fund, withdrew approval for the fund's financial statements for 1996, 1997, and 1998.

A subsequent investigation by fund administrator and local Ernst & Young affiliate Fund Administration (Bermuda) Inc. revealed the extent of the losses and accused the fund's managers of misrepresentation.

Last week two American law firms Thelen Reid & Priest LLP and Berlack, Israels & Liberman LLP, addressed a shareholders meeting in Geneva to explain the legal options to sue the ill-fated fund. James Gillies, Editor-in-Chief of the Internet site Hedgenews.com, posted details about the meeting on the company's web site. It states: "Both firms said that the facts of the case are not as yet known. It will take time to gather information on what precisely happened.

"All shareholders need to understand that this process may take a number of years and will be expensive. Considering the potential compensation that may be received, it clearly makes good sense at this time to start investing the necessary time and money into this project.'' Both law firms said the best course of action would be for Manhattan shareholders to file group actions, and it was possible for all shareholders to form one group. In the past two weeks a flurry of other mutual funds which were investors have filed writs against Michael Berger, the fund administrator, Manhattan Investment Fund, Manhattan Capital Management, Fund Administration Services and the Bank of Bermuda.

This week the ninth case was filed by Michael William Rhode against Mr.

Berger, the Manhattan Investment Fund, Manhattan Capital Management Incorporated and Fund Administration for $500,000.

This takes the total being sued for in Bermuda to $4.762 million. Last week we revealed that the bank had been hit with eight law suits worth over $4 million to freeze funds deposited with the bank by the fund.

The Bermuda Registrar of Companies has also filed a writ against Manhattan Investments Ltd in relation to the fund. Other writs have been filed by Allen Essner, Jeffrey Stephens and John Wuenche, as trustees of the Yorkshire Trust, against the Bank of Bermuda, Manhattan Investment Fund, Mr. Berger and Manhattan Capital Management. No amount was filed.

They were joined by Republic National Bank of New York (Suisse SA) who filed against the same four parties for $992,000.

Flexor Multi-Manager Fund Ltd were the last to file against the four for $800,000. Last week writs were issued against the bank by Absolute Alpha Fund PCC Ltd and Avis Fund Ltd and Richcourt Superplus Inc. In writs just against the bank BAS Equity Neutral Fund Ltd for $2 million was followed by Eagle Ray Fund, for $470,000.

Kreditbank SA named Fund Administration (Bermuda) Inc and Manhattan Investment Fund in addition to the bank.

The Bank of Bermuda have moved to distance themselves from the legal action.

In a written statement, spokeswoman Elizabeth Tee said: "Several writs have been filed against Bank of Bermuda relating to the Manhattan Investment Fund Ltd. Several entities and individuals involved with the Fund have been alleged to have committed securities law violations and made misrepresentations concerning the fund. The SEC (Securities Exchange Commission) has taken action against the fund in the US as have several investors.

"Bank of Bermuda is mentioned in the writ only as a holder of monies on behalf of the Fund, against which claims have been made. The bank has been named in these actions only to prevent the release of the funds. No claims or allegations have been made against the bank.'' Ernst & Young spokesperson Leslie Zuke, who is dealing with all matters concerning Fund Administration Services and Manhattan, said the company could not comment in detail about the case.

He said: "Fund Administration Services (Bermuda) Ltd resigned as a result of receiving notice that Manhattan Capital Management had misrepresented its trading results. The SEC's allegations are consistent with our belief that Manhattan Capital Management, the fund manager, took extensive steps to hide the truth from Fund Administration Services (Bermuda) Ltd and the investors.

"Fund Administration Services (Bermuda) Ltd is an affiliate of Ernst & Young Bermuda, a member firm of Ernst & Young.'' LETTER OT INVESTORS This is the January 14 letter Michael Berger sent out to investors, admitting that actual net losses were substantially less than those previously reported.

"To the shareholder of Manhattan Fund. Please be advised that I have recently informed the authorities that the financial statements of the Fund that have been distributed over the last several years have been inaccurate and that the fund's actual net assets are substantially less than those previously reported, primarily as a result of market losses over that period of time. I am cooperating fully with the authorities including any effort they may undertake with respect the Fund's affairs.'' See Chronology below