MFSA reprimands BOV over breach of investment services rules

Bank of Valletta has been reprimanded by the Malta Financial Services Authority (MFSA) over a breach of investment services rules – unrelated to the investigations into the La Vallette multi-manager property fund.

The reprimand concerns breaches that refer to the provision of information by BOV to its customers in 2010, relating to a US dollar denominated issue of local corporate bonds to the public. “BOV failed in various instances to ensure that the information provided to clients was fair, clear and not misleading. This reprimand is being published in accordance with the provisions of the MFSA Act (Chapter 330),” the regulator said.

The MFSA has not yet published the reports of their investigations in the La Vallette multi-manager property fund, which the bank believes the regulator does not have the legal power to do so.

The regulator’s investigations concern claims that the fund lost some €50 million of their savings, citing breach of prospectus, the issue of false custodian reports by Bank of Valletta, complaints of mis-selling and allegations of improper use of price-sensitive information by Bank of Valletta insiders and employees.

BOV claims that article 4 of Chapter 330 of the Laws of Malta does not give any power to the MFSA to publish such a report because such power is circumscribed by other dispositions in the law over who can be shown a copy of this report.

The bank is saying the MFSA can publish its decision, but not its report.

The MFSA has already said that while it would like to be in a position to better inform the public about what is going on in the property fund investigation, “we are contending with entities and parties who are contesting certain claims and refuting certain positions taken by the MFSA.”

Over 200 investors filed judicial protests against the bank, holding it responsible for how the fund, once valued in excess of €84 million, was depleted to some €24 million in 2009. The investors claim the bank breached its own investment rules when it allowed La Vallette to invest their money in property funds whose liabilities were higher than their net asset value.