Labour calls on MFSA to publish BOV propert fund reports

One of the three investigations, the breach of investment restrictions by the fund’s managers, has already been completed but the MFSA has not published the report.

“If investors are not aware of this investigation’s findings and recommendations, they cannot come to an informed decision on the offer the bank is making them,” Mangion said. “This is one of the principles of investment.”

"Labour understands there might be a period which must be observed by law before an investigation is published. So in the interest of the consumer, it is recommended that discussions and offers should take place after publication of the investigations, as soon as possible."

The financial regulator will not publish the report into a breach of investment restrictions by Bank of Valletta and its subsidiaries in the La Vallette Sicav’s multi-manager property fund, the chairman of the MFSA said.

“The MFSA is obliged to publish its decision, but not the report,” Malta Financial Services Authority chairman Joe Bannister told The Times.

The inquiry has been ongoing for nine months now, and has led Bank of Valletta to offer investors in the fund – believed to have lost some €50 million in value – a compensation of 75c per share. BOV has indicated the first report, into a breach of investment restrictions, has been completed and delivered to the bank.

But the MFSA is still conducting two reports into misselling of the property fund to retail clients who were not “experienced investors”, and alleged insider trading.

BOV says it has disagreed with the MFSA’s conclusion on the breach of investment restrictions, which according to the fund’s prospectus, precluded the bank from investing monies in other real estate funds whose immovable property was backed up by too much debt and loans.

The total buyout – if investors accept – will cost the bank €45 million, of which €14.5m is due as compensation for the fund’s underperformance.

Paul Bonello, of Finco Treasury Management, has presented judicial protests against the bank in the name of some 400 investors. He said all shareholders who accept the 75c share offer would have to give up any right to take legal action against the bank on any of the allegations that might be confirmed by the MFSA in two investigations into insider trading and mis-selling of investment products.

“How could the regulatory authorities permit such a morally dishonest and unjust move to be committed by the economically strong institution against the general public?” Bonello asked.

Bonello said the 75c offer was positive as a first step, but he said the bank was now presenting the property fund investors – many of them ageing and not cognisant of the difference between a bond and a share – with a “take it or leave it offer.”

“Why should these investors accept this offer and drop any claim against the bank irrespective of what emerges from the MFSA reports? This offer has no approval from the MFSA, so what sort of investment protection is this?” Bonello asked.