Bank of Valletta pays compensation to ineligible investors in La Valette property fund

The investors in the La Valette multi-manager property fund have been paid compensation of €1 for every unit invested, after Bank of Valletta wrote to clients who were found to have been entitled to further compensation in an independent review of the fund's client files.

The file review by Mazars was ordered by the Malta Financial Services Authority back in June 2012, to review BOV's client files and establish which clients were entitled to compensation of €1 per unit invested in BOV's property fund.

The review was completed shortly before Christmas 2012.

"Most people due compensation have received credits direct into their accounts, and others will be receiving cheques shortly. BOV has written to all clients involved, informing them of the decision in the Mazars Report," the MFSA said.

The MFSA is also publishing the report prepared by Mazars [DOWNLOAD PDF] which sets out the methodology used, the conclusions and the number of BOV clients who were considered to be due compensation under the terms of this review. Those investors will have now effectively received €1.00 for every unit invested.

The MFSA has also updated the Question and Answer document on its website, that sets out many of the issues raised by consumers during the investigation.

The MFSA's investigation relating to the sales practices adopted and employed by BOV and its subsidiaries when selling shares in the property fund was closed in June 2012, having found that in various instances BOV had failed to act in the best interest of investors.

The statutory maximum fine of €203,150 was imposed on BOV for breaching licence conditions when selling units in the fund to its clients.

The MFSA also issued a directive which required BOV to co-operate with a client file review by an independent professional services firm.

The client file review, conducted at the offices of BOV, determined which of BOV's advisory client investors in the property fund could not be shown to qualify as experienced investors: investors for whom the client fact find or BOV's transaction history or other records held by BOV did not demonstrate qualification as an "experienced investor" as defined in the prospectus.

BOV has to pay all expenses relating to the client file review carried out by Mazars.

BOV has however appealed the directive which orders them to co-operate with a client file review and pay compensation to advisory client investors who were not experienced investors when the investment was made. The appeal is currently being heard by the Financial Services Tribunal. BOV is still required to comply with the directive.