MFSA not empowered to sell Maltese Cross assets

The MFSA has said that investigations into Maltese Cross Financial Services, which lost millions in investors’ savings, are still ongoing.

The MFSA has appointed an audit firm as a technical expert to assist it on certain aspects of the investigation.

“From the Authority’s investigations to date it results that the misuse and manipulation of clients’ assets was predominantly in respect of investments held by the company on a nominee basis,” the authority said.

As at 11 August 2014, the total value of investments held by the company on a nominee basis on behalf of its 222 clients should have amounted to just above €6,950,000. However, the total value of investments still intact and which therefore remained held under nominee as at 11 August 2014 amounted to just below €475,000. There is therefore a shortfall of just above €6,475,000.

In March 2015, an application for the liquidation of the company was submitted to the Court by the directors of the company.

As regulator, the MFSA requested the Court’s permission to intervene in the case. Pending the Court’s decision on whether the company should be dissolved and wound-up, on 28 May, 2015 the Court appointed the official receiver as provisional administrator of the company in order to take control of the company and all its assets and to administer the company’s affairs instead of the directors.

The MFSA said that the provisional administrator is not empowered to sell or dispose of any assets of the company in order to pay any debts or liabilities of the company. If the Court decides that the company should be dissolved and wound-up, a liquidator will then be appointed.

Investors who lost some €6.2 million in savings they invested with Maltese Cross Financial Services, have threatened the financial regulator with legal action in a judicial protest filed Tuesday. The investors claim MFSA failed to perform its fiduciary duties by never conducting annual inspections at Maltese Cross.

On its part, the MFSA has stated that auditors PricewaterhouseCoopers, the external auditors of Maltese Cross, had green-lit the financial services firm’s annual returns presented to the regulator.