Property fund director had access to inside information

A director on the La Valette Funds Sicav has resigned his post with effect from 6 January 2012, according to a form submitted today by Bank of Valletta to the Malta Financial Services Authority.

John C. Ripard resigned his directorship of the La Valette Funds and Wignacourt Funds, after the MFSA reprimanded him for disposing of his holdings in the La Valette Multi Manager Propety Fund whilst in possession of sensitive information which was not available to the public and which he became privy to in his capacity as a director of the La Valette Funds.

The MFSA said in a statement released after MaltaToday first reported Ripard's resignation this afternoon, that Ripard had "voluntarily tendered his resignation from the post of director on the boards of both the La Valette and the Wignacourt Funds Sicavs.

While the MFSA's sanction is dated 5 January on its website, and Ripard's resignation is dated 6 January on the Wignacourt Funds' financial statements, BOV filed the retroactive resignation on 19 January. Only today did the MFSA announce its reprimand of Ripard, back-dated to 5 January. In fact, the press last reported a previous sanction against BOV, on its sale of Lehman and RBS instruments, when it was issued on 5 January.

Both the La Valette and Wignacourt funds are managed by BOV's investment arm Valletta Fund Management. The La Valette fund now has as its directors outgoing BOV chief executive Tonio Depasquale, former ambassador Salvino Busuttil, and Valletta Fund Management.

BOV and Valletta Fund Management were fined €350,000 in an initial investigation by the MFSA, for having breached the fund's investment restrictions.

Another investigations now centrse on whether the bank sold the fund to retail clients who were not 'experienced investors' at law.

Ripard's resignation is prompted by an MFSA investigation of whether €16 million in redemptions that took place in 2008 happened because investors had access to price-sensitive information that showed the fund was performing badly.

The financial statements for the La Valette property fund for 30 September 2008 also show John C. Ripard had divested his investment in the fund entirely that year.

The MFSA is trying to establish whether the redemptions that took place before the property fund was suspended had been abnormal, since 14.7 million shares, or 16% of the fund were withdrawn right before the fund lost €50 million from investments it held in debt-ridden property funds.

The withdrawals certainly took place before the 7 August 2008, when BOV suspended all redemptions, at a price of anything between €1.07 and €1.17 per share. After the fund was suspended the value of the shares crumbled to 26c per share.

Bank of Valletta is on record stating that it attempted to withdraw a large investment the fund held with the Belgravia property fund, back on 17 March 2008. It is understood that the bank was already aware of the problems afflicting Belgravia when the group published its 2006 audited accounts on 30 January 2008, revealing that its debts were twice as big as its assets.

Although Belgravia suspended redemptions on 1 April 2008, Bank of Valletta still accepted investments in the fund up until August 2008, when it suspended the fund.