Investors demand Sicav takes action against its owner, Bank of Valletta
Investors call on MFSA to issue report of BOV investigation, and tell Sicav to take action against bank.
17 June 2011, 12:00am
Matthew Vella
Matthew Vella
3 min read
The legal representatives of 452 investors in the La Valette multi-manager property fund and Finco Treasury Management have written to the Sicav’s chairman Prof. Salvino Busuttil, to take “immediate action” against Valletta Fund Management and Bank of Valletta to compensate the fund’s shareholders.
VFM and BOV are respectively the manager and custodian of the fund, which lost some €50 million in investors’ savings – investors say the money was invested in underlying property funds with too much debt.
But both the La Valette Sicav and VFM are directly owned by Bank of Valletta, which this week was fined a record €197,995 by the financial regulator for failing to monitor the application of investment restrictions in the fund’s prospectus by VFM, and for failing to make accurate reporting in the fund’s annual financial reports between 2006 and 2009.
VFM was fined €147,000 for wrongly applying the investment restrictions laid down in the prospectus and failing to monitor its delegates Valletta Fund Services – another BOV subsidiary – and Insight Investment Management.
“Our clients are calling upon you to take immediate action against VFM and BOV and against all or any other persons at fault to compensate our clients for all the losses and damages suffered as a result of the diminution in value of their investments together with interest,” the investors’ legal representatives said.
The investors warned they would take further action against the directors personally.
In another letter (READ FULL LETTER) to the Malta Financial Services Authority, the investors are calling on the regulator to furnish them with the report of its investigation into the wrong application of investment restrictions by the Sicav.
Investors say that as protestors in the property fund saga, they were made aware of the completion of the MFSA’s first investigation on 26 May 2011 when BOV announced a compensatory 75c share issue.
On 15 June the MFSA announced its sanctions against BOV and VFM – the bank has 30 days to appeal the decision, which it has already said it will.
“Having made its offer of 75c per share back on 26 May, BOV had every opportunity to consider the MFSA’s report of its investigation on the investment restrictions. Additionally, acceptance of the share offer binds investors to drop all legal liability against the bank and its functionaries, which might result from the further investigations of the authority,” legal advisor Prof Ian Refalo writes.
“Without this report, the regulator is denying the investors the right to consider the authority’s report before accepting the bank’s offer… the authority is discriminating in favour of BOV and neglecting its duties to protect investors.”
The MFSA is still in the process of investigating two major complaints: one of misselling the property fund to clients who were not experienced investors as defined by the law; and allegations of access to price-sensitive information.
Shadow finance minister Charles Mangion has called on BOV to repeal the offer and mediate with the investors. “Labour appeals to the MFSA to carry out its role in the remaining investigations.”
Bank of Valletta has rejected suggestions that bank employees and a property fund director had access to price-sensitive information on the La Valette multi-manager property fund before it was suspended by the bank.
Allegations raised in judicial protests by the fund’s investors and Finco Treasury Management claim that €13.4 million in shares, or 16% of the fund, was withdrawn by investors aware of the worsening state of the property fund.
BOV has announced a compensatory 75c share offer to some 1,000 investors in the fund. But Paul Bonello, the stockbroker who kick-started the series of judicial protests against the bank, has called the offer “morally dishonest”.
Bonello said the 75c offer was positive as a first step, but that the bank was presenting the property fund investors with a “take it or leave it offer.”
Matthew Vella, a freelance journalist at MaltaToday, was formerly executive editor at Malt...
Anthony Haidon •
May I refer readers to Mr.Caruana Dingli's comment appearing on the Times of Malta website. There, Mr.Caruana Dingli produced a 'timeline' regarding shortcomings in the running of the Fund. This can be seen through the MFSA's website and it shows that the Fund has long been a thorn in the side of the MFSA. It seems to me that the red light has been flashing for a very long time and none of us shareholders were told of this, except of course some shareholders who withdrew at an above par price and whom I shall refer to at this stage as 'clever investors' How's that for INVESTOR PROTECTION.
owen sammut •
These failings by the BOV Group is severely damaging the financial industry in Malta. The role and effectiveness of the MFSA are also currently being scrutinised.
BOV Group which up to now was perceived as a serious financial institution has huge gaps in its internal controls, risk management and corporate governance structures and these duties are the primary responsibility of the Board and top management of the bank. I think that now the Board has lost all the confidence and trust of BOV shareholders and the only honourable way out is for the team led by Mr. Chalmers to resign and not continuing persisting in doing further damage to the bank.
The role and effectiveness of MFSA are also being scrutunised by the General Public, the Maltese investing public and potential investors in the financial industry in Malta. Seeing Finco's letter to the MFSA in which Chapter and verse of the Law is being quoted in various instances, it is evident that the MFSA lacks the personality to carry out its full duties entrusted to it by legislation. The MFSA should be now fufilling the role of a knowledgable blood-hound and not act as a toy poodle and be manipulated by a financial institution which has proved to dupe and mislead the Maltese investing Public. This shows how important it is for Regulatory Institutions to be led by persons who not only have the requisite knowledge but also the personality, independence and frame of mind to discharge their duties effectively in favour of the general public, which after all is the primary client of such institutions. Time and time again unfortunately Regulatory Institutions in Malta are led by political appointees who lack the required attributes to safeguard the consumer. Most of them act as stooges of their political masters.
Anthony Haidon •
When all is said and done and if and when some sort of closure is achieved, will the general public feel protected regarding financial matters? Can the investing public rely on the effectiveness, integrity and impartiality of the MFSA? So far this institution has discriminated against the investor. The outcome of this nasty business may determine the future stockbroking in Malta.
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Chalmers ghandu jkun ma ghandux xjaghmel hlief jikteb ittri biex jipprova jiggustifika ruhu. Imma kollu ghal xejn ghax aktar ma jikteb aktar tohrog rieha ta hmieg. Forsi Chalmers jghidilna jekk in nies li kien responsabbli li investew f dan il fond kinux xi pampaluni Nazzjonalisti li hadu promotion fug promotion fi zmien Chalmers. U se jittiehdu passi kontra min ghamel din il qassata? Jista jghidilna ghaliliex qieghed jitfa pressure fuq il haddiema biex icemplu lil investituri biex jaccetta l offerta tal bank? Forsi dawk il branch managers li jipperswadu in nies jiehdu l offerta se jiehdu xi promotion? U hallina Chalmers. F ahhar net ghal ministru dan mhux CUC malti
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fuq ftit euros hajti mizerja gibtuili u mandat fuq mandat batuli.. issa dawk inies li jihdu hsieb il gbier tal flus tal b.o.v kellom bzon dbezbieza ghax ma min iridu jamlu idejn ibsa u ma min jafuh jirengawlu kollox.
issa jibda il biki tal bank u jergaw jibdew loferti imma jien kontriekom ha nahdem all the way.
pay back. and for that bitch of the recovery hope you and up working in very hard factory so you cut you bullshit once for all.
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b.o.v mandomx minies uma jistaw jamlu li irdu imma alla hares bniedem tigieh hazina ghax jibqaw sa kemm isalbuh.
tuna dak li u tana b.o.v ghax ahna batejna ghal dawk il flus.
imma intom il flus bil qerq u uzura legali qlajtuom mux bhalna ghax rajna laraq ta demm.
alla idejh kbira u dawk li ghamlu fuqna ihalasom alla.
hafna paroli mil manegers li jafu xinuma jamlu umbat lewwel li gibdu il flus uma.
dawn uma ghar kriminali li jezistu fidinja ghax jidru li uma ta ezempju u jamlulek hajtek infern.
vera bustard il b.o.v u miskom dbehuh il baranin ghax fjask ta imboljuni
Mark Fenech •
The Chairman of BOV has this morning send us another letter, telling us once again to take up the offer. I would have preferred to receive a copy of his resignation rather than another stupid letter.
Mr. Chalmers, as Chairman of BOV, together with top management of the Fund and the Board of Directors should resign fortwith. There is no reason why they should keep their job after all this mess.
Well done Mr. Bonello of FINCO, only you was telling us the truth, and BOV would have taken us to the cleaners if it was not for you to guide us with the proper documentation on this very important issue.
We should remain united and we should not allow BOV to bully us.
Well done LP for doing all possible to protect the small investors. We want justice to be made and BOV should do as Barclays did in UK and paid in full its investors when they were found at fault by the British Financial Services Authority.
Anthony Haidon •
Should it have had to take a letter from from the legal representatives of 452 investors in the fund to ask the Sicav chairman to stand up for the investors, which so far it seems he has failed to do. And why is the MFSA discriminating in favour of the BOV, and neglecting its duty towards investors. Two important details which are not much liked by the European Court of Human Rights.
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BOV Chairman should do the proper thing by reaching agreemnt with those investors that have been cheated. This may hurt his ego and that of the CEO and his top manageemnt whom he trusted so much. But it is the right thing to do.
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Din hija veru haga tal-misthija ! Sur BOV ma timxiex hekk ma min ikkollu itik ftiet eluf ghax mandati , sekwestri u ghanqas cans ta xejn, tippruvaw issalbuh lil dak li jkun .. biss jekk l-istorja tkun bil-maqlub qed naraw x'jigri! fl-oppinjoni tieghi ghandu jkun hemm solidarjeta ma dawn in-nies...jaf il-poplu x;ghandu jaghmel !
