Stockbroker welcomes landmark decision, ‘MFSA must now publish BOV report’
Finco’s Paul Bonello says investors deserve MFSA’s opinion on BOV’s compensatory offer.
16 June 2011, 12:00am
Matthew Vella
Matthew Vella
3 min read
Paul Bonello, the stockbroker who provided the financial evidence on the mismanagement of the La Valette property fund, has welcomed the landmark regulatory decision to fine BOV and investment arm Valletta Fund Management €350,000.
The MFSA yesterday published its decisions on the first of three investigations, namely on whether the property fund had breached its own investment restrictions when it invested money in underlying funds which had too much debt.
But Bonello said the MFSA should provide a full copy of the report it submitted to BOV. “It would otherwise be a denial of an inalienable right of the investors by none other than the regulator and their presumed protector.”
He also said BOV, which is appealing the MFSA decision, should stop pressuring investors to accept its compensatory share offer, which is due to expire at end June.
“The gearing restrictions in the prospectus are clear, objective and unequivocal. BOV ought not to have challenged Finco, the investors and the MFSA in such manifest circumstances of wrongdoing, causing unnecessary hardship to its clients, the Bank itself and Malta’s financial services industry,” Bonello said in a statement.
“Instead BOV has only attempted to defend that which is indefensible and engaging in derogatory language against the leaders and advisors of dissenting investors in an attitude not befitting a dignified and professional bank management.”
Bonello also said the fund had lost some €35 million out of €52 million in vested in the Belgravia European property and logistics funds, the London & Capital German real estate fund, and the Glanmore property euro fund.
He added that other losses comprised of €12 million in incorrect valuations of fund prices, and losses caused directly to many investors as a result of alleged mis-selling the Fund to non-experienced investors. This is also the subject of another MFSA investigation, as well allegations of improper use of price-sensitive information by insiders.
“The decision of the MFSA confirms the thesis of the investors in the property fund that they were not provided with the fund the prospectus purported to offer,” Bonello said.
“They would not have invested in the fund if they knew that the level of gearing could exceed the maximum of 100% of the respective net assets… for this reason, BOV and the Sicav directors failed in their legal duties towards investors. They are liable to pay redress, and this by way of refund of capital cost and interest.”
Bonello also said the MFSA must reply to the property fund investors’ legal advisor’s request to know whether the €0.75c share offer from Bank of Valletta, conditional on dropping all legal liability against the bank, was approved by the regulator.
“The MFSA should say if it considers BOV’s offer equitable or not,” Bonello said, who claims a fair value of compensation is the full capital invested plsu legal interest.
“The MFSA is obliged to express or publish an opinion on the fairness of the offer. If not, it is legally and morally obliged to use its powers to issue directives to BOV to have the offer withdrawn or suspended.”
Bonello also said the MFSA should take the initiative to use court action to force BOV into restoring investors to the position they were before the transaction was entered into. He said many “aged investors” did not have “the physical and financial stamina” to afford the expense and ordeal of court litigation.
Matthew Vella, a freelance journalist at MaltaToday, was formerly executive editor at Malt...
Anthony Haidon •
Another letter received from the BOV re Fund, its contents, MORE OF THE SAME. When is the MFSA going to be given authority in line with the rest of Europe? Is it now going to have a ping pong match with the BOV or is this whole ugly business ending up in court? I know , as I am sure others do, that the E.C.H.R. has many a time found in favour of plaintiffs because the authority that be did not afford protection, in this case to us the investors. Would somebody please comment on this? But please stick to the point and no mud hurling, it's the dry season.
Mark Fenech •
Alchemist - if you want us to believe that you do not have a hidden agenda then just write under your proper name.
The fund went down, not through market flactuations but due to mishandling of our funds, which were invested with a set of criminals at Belgravia Funds. Had it been a market flactuation we would not have contested the issue, but this is a different case, where our funds were not invested in accordance with the provisions of the prospectus.
If you do not have any interest as you are stating, you should not get involved and leave us to run after our money.
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@Vincent
I have no interest in this matter NOR do I have any CONFLICT of interest whatsoever as I have no shareholding or otherwise in any financial intermediary operating in Malta.
I myself bought shares in one of the local banks (not BOV) and the value of these share has depreciated by more than 53% and the dividends paid are not what used to be.
It was my own decision to buy these shares. What do I do, whine and bang my head against the wall because I made a mistake.
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"Blaim on you" soory for the mispelling
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@ Vincent
Maybe you are right to complain and I can't plaim you for that, but what the Alchemist stated, is also food for thought.
Is anyone keeping in mind those genuine workers workers in this instution? Do you want another Sea Malta, and now Selmun and Air Malta?
Mark Fenech •
Well done Mr. Bonello. Had it not been for your pressure and documentation we would have finished empty handed. One must remember that when we submitted our first official letters to BOV, Mr. Chalmers told us that all was untrue and only he was correct.
Naturally he had to take back all his words subsiquently for actually he was the man responsible for all the errors that BOV and its Property Fund Management had turned our funds into peonuts.
We shall not be bullied by BOV and Mr. Chalmers should have already resigned, together with the Board of Directors of the Fund, the auditors, and the Management. They invested our funds with criminals of Belgravia.
We must also thank Dr. Charles Mangion and Hon. Evarist Bartolo for putting pressure on MFSA to publish its first decision. We want to see the full report as it is due to us in accordance with MFSA Act. Had it not been for these two gentlemen we may have had to wait for ages until MFSA would publish something on the operations of BOV, who did not act as our custodian as the bank should have done to safeguard our investments.
BOV should pay up the principal plus interest accrued.
owen sammut •
It is fortunate that investors have found someone with the knowledge, financial acumen and stamina of Paul Bonello (Finco) as their champion and leader. Remember that this is Malta and were it not for Finco and Paul Bonello in particular, nothing would have happened- as usual in Malta no one is ever responsible.
This decision by MFSA puts the investors in a very strong footing in Court. Proof has now already been established that BOV has maladministered the fund and did not exercise its duties properly and act as a 'bonus pater familias'
I fully agree with Mr. Bonello that it is a shame that BOV is continuing to defend what is indifensible. BOV's Board and top management are now doing a lot of harm to BOV's shareholders. BOV will only sort out this mess after the Board and Management overhaul which should take place at BOV's next AGM. Existing Board Members and top management have of lot of vested interests in the matter. They cannot evaluate the matter properly and do what is right for the bank and its shareholders.
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the alchemist,FINCO ARE DOING THE JOB FOR US (INVESTORS) AS WE DO NOT HAVE SOMEBODY LIKE YOU TO HELP US.DID YOU TAKE YOUR MONEY LIKE THE ONES IN BOV.
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Well done MFSA
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What's in it for Finco in all this saga?
