Light at the end of the tunnel for ARM investors

The UK's Financial Services Compensation Scheme (FSCS) could be contemplating a final pay-out for Maltese investors in the ARM Asset Backed Securities, of up to some GBP50,000 per person.

MaltaToday has been told by investor representatives that that the FSCS will compensate both those in the capital growth as well as the annual income plan investors who lost their money in the ARM securities.

"Compensation may take up to six more months to be paid, and may be paid directly to the individual investors," Paul Bonello, of Finco Treasury Management, said.

Finco Treasury Management is assisting many investors in ARM who had bought their investment through MFSP Financial Management and All Invest Co Ltd, both of which have been sanctioned by the Malta Financial Services Authority. In the case of MFSP, the firm had its licence restricted to not dealing in complex securities, while All Invest had its licence suspended indefinitely.

Although nothing official has been released by the FSCS, the compensation scheme committee decided in favour of including Maltese investors late last week.

All investments for Maltese investors had been bought through MFSP, which in turn had purchased the investments through Catalyst Investment Group, a UK firm licensed by the UK financial regulator, that became insolvent and declared "in default" after having misled investors, even through brochures circulated in Malta.

According to the website of provisional liquidators' website BDO UK, a block vote from investors in favour of Andre Micallef of MFSP took place to elect him to the committee to assist the provisional liquidators.

But it transpired that "the Provisional Liquidators did not consider these votes to be valid" after it they ascertained that "certain votes cast with the purported intent" to elect Micallef were found not to have originated from the individual investors.

"I was asked by BDO UK about the voting intentions of his clients, and I confirmed that none of the clients that Finco represents and for whom they had submitted 'creditor proof', had in fact voted for Andre Micallef," Bonello told MaltaToday.

BDO UK announced that they have instead asked the Malta Financial Services Authority to participate in the committee discussions to represent the interests of Maltese bondholders generally.  The UK FSCS is also a member of the Creditors' Committee.