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MFSA fines BOV over sale of Lehman securities to investors
Finco says MFSA should take Bank of Valletta to court over investors’ compensation.
5 January 2012, 12:00am
Matthew Vella
Matthew Vella
2 min read
Paul Bonello, the director of Finco Treasury Managment, said the MFSA should take BOV to court over investors' compensation. (Photo: Ray Attard/Mediatoday)
The Malta Financial Services Authority has imposed an administrative penalty of €175,174 on Bank of Valletta plc for regulatory breaches related to disclosure of information and suitability of financial instruments sold to the general public.
The penalty was the culmination of a lengthy investigation triggered off by a number of complaints on the manner in which certain securities had been sold to investors, including perpetuals and other preferred securities issued by Lehman Bros, Royal Bank of Scotland, HBOS and others.
Paul Bonello of Finco Treasury Management, who was at the forefront of clients' complaints against the bank, said the MFSA was empowered to take legal action against BOV as allowed by Article 21 of the Investment Services Act.
"The MFSA should not stop short of exercising its powers in order to avoid elderly and inexperienced members of the public the trauma and expense involved in conventional court litigation in circumstances where Bank of Valletta remains intransigent and unrepentant in the wake of the fourth finding against it published by the MFSA in nine months."
Investigations have been ongoing since 2009, when a number of investors lodged complaints with the MFSA's Consumer Complaints Manager, requesting a review of the manner in which such preferred securities had been offered to them.
In the main, the complaints had been prompted following the collapse of Lehman Brothers in September 2008. However, during the course of its investigations, the authority had also widened the scope of its review to other preferred securities which formed part of investment portfolios of a number of complainants.
On the basis of its findings, the MFSA authority has recommended to the bank to compensate the aggrieved investors. In some cases, it appears that the bank accepted the Authority's recommendations and reached a private settlement with the investor. In a number of other cases, the bank disagreed with the Authority's findings and recommendations.
"In the case of a consumer complaint, the MFSA is only empowered to make recommendations," the authority said. "The bank and the complainant may choose not to accept the MFSA's recommendation, in which case the matter could be pursued through other legal means. All complainants are in the process of receiving a letter from the Authority regarding the outcome of their complaint in relation to this investigation."
Bank of Valletta has a right to appeal from this decision up to the 26 January 2012.
In the meantime, the Authority shall continue investigating any current and new complaints against the bank in relation to these preferred securities along the same parameters the Authority has employed in determining the above cases. Each case will be treated on its own merits.
Matthew Vella, a freelance journalist at MaltaToday, was formerly executive editor at Malt...
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Fil Bank of Valletta hemm hafna hard selling tactics. Ma ghandhomx tort il branch managers jew i iskrivani. Dawn ghandhom pressure biex ibieghu u jekk ma jilhqux it targets jispiccaw jaqilu xi transfer jew umiljati. Il hard selling tatics gejjin min fuq dawk li dejjem paxxuti fuq xi siggu l Head Office u ma jaghmlu xejn. Barra li twahhal il multa, l MFSA ghanda tara minn huma dawn il persuni li jifformulaw il sales policies tal bank u jghaddu board ta dixxiplina. Tajjeb li jekk cashier imur short jadduh mil arbiel. Allura minn japprova is sales procedures ghandu jiohrog scot free? Barra min hek il Ministry tal Finanzi ghandu ikollu l guts inehhi c Chairman ghax dan ma ghandux id dicenza li jirrizanja
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If BOV is fined for dealing with Lehman securities and goinziPN used Lehman as consultants for the BWSC projedt.
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MFSA does only submit recommendations......no teeth to bite. What kind of Authority is this....to many loopholes in the legislation. Who suffers - the investors. This incident can open eyes to many investors that in Malta investing in securities is not SAFE.
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This must be the third or fourth penalty imposed by the MFSA on the Bank of Valletta in the last few months - but of course no doubt the bright spark anointed by gonzipn to head the Bank will again insist that there will be no heads on a platter. Why should there? - after all once gonzipn has set the national standards about accountability and conveniently ignores the culture of resignation, why should his satellites not adopt the same yardstick? After all the penalty does not come out of the pockets of the acolytes of gonzipn .... in this case like other penalties before, it will come straight from shareholders' dividends .... what a nice place to be for gonzipn and his lackeys.
