Bank of Valletta won't appeal regulator's decision

Bank of Valletta has announced it will not appeal the decision by the Malta Financial Services Authority that fined the bank €350,000 for breach of investment services rules over the administration of the La Valette multi-manager property fund, which registered over €50 million in lost savings.

The bank said there was “little practical merit in an extended adversarial dispute with the MFSA” given the acceptance of its compensatory offer of €0.75c share offer by 95% of investors in the fund.

“This decision has been taken without prejudice to the views of both BOV and Valletta Fund Management that the MFSA conclusions were wrong and misconceived, both in fact and at law. In particular, BOV and VFM do not accept that their executives carried out their work without due diligence, professionalism and care,” the bank said.

The regulator fined VFM €149,000 for failing to “properly monitor its delegates” – Valletta Fund Services and Insight Investment Management – on applying the investment restrictions of the La Valette property fund, and failing to maintain adequate records. BOV was itself fined €197,995 for the wrong application of the investment restriction, and for not making accurate reporting in the property fund’s annual financial reports for the years 2006-2009.

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.

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by the fund’s investors and Finco Treasury Management claim that €13.4 million in shares, or 16% of the fund, was withdrawn by investors aware of the worsening state of the property fund.

Specifically, it was a €17 million investment in the Belgravia European Property Fund – that was geared at over 100% - that is suspected of having lost in excess of 90% and is today estimated at €1.3m, while other investments originally valued at some €47 million fell to €18.5 million.