La Valette fund investors sue Bank of Valletta for damages

Three investors file court case against Bank of Valletta and La Valette fund directors.

Outgoing BOV chief executive Tonio Depasquale is one of the persons being sued in the action against the bank.
Outgoing BOV chief executive Tonio Depasquale is one of the persons being sued in the action against the bank.

The first three investors of a group of 20 who turned down Bank of Valletta's compensation offer for the shares held in the La Valette multi-manager property fund, have filed a court case for damages against the bank and the directors of the Sicav, Prof Salvinu Busuttil, outgoing Bank of Valletta CEO Tonio Depasquale, and John C. Ripard.

The investors, Leonard Gauci, Emanuel Zammit, and Theresa Cassar will seek a court's ruling for the compensation of the investment they lost in the La Valette fund, whose custodian was Bank of Valletta.

In June 2011, the bank offered investors a conditional compensation offer of 75c per share after the La Valette fund was found to have lost some €50 million in value. After filing various judicial protests against the bank in the name of the property fund investors, stockbroker Paul Bonello's accusations were later confirmed in the investigation by the financial services authority that fined BOV and its investment arm Valletta Fund Management €350,000 over a breach of investment services rules.

The 30-day compensation offer was however conditional on investors dropping all legal claims they might have against the bank once the regulator issues its investigation report.

A total of 2,021 out of 2,075 investors - 97.4% - accepted the offer, with BOV issuing payments of €44.1 million for 60.3 million shares held in the fund.

Since then, BOV has informed the regulator of major changes in its custody division. These include a 'root and branch' review of its sales and compliance functions, and a review of compliance arrangements with Insight Investment Management, which managed the La Valette fund.

The MFSA has yet to issue its conclusions on another two investigations, dealing with the misselling of the property fund to retail clients, and the alleged access to price-sensitive information of a Sicav director and other bank employees and clients who sold off their investment in the fund before it was suspended in 2008 when it went belly-up.

On 28 June the MFSA issued a directive against the bank, although it did not publicise it, to allow La Valette property fund investors the right to pursue their complaints against the bank with the regulator if they accepted the share offer.

Bank of Valletta appealed the directive on 24 October, asking the financial services tribunal to have the appeal take place in camera because media coverage would have "disproportionate adverse effects... on reputation" and because of "concern about undue influence by the media possibly distorting the course of the proceedings."

Publicly, the MFSA criticised BOV's "uncooperative attitude" over investor complaints, while the bank said it was bound by banking secrecy rules.

The bank claims the MFSA directive is unclear and that it gave investors full liberty to decline its offer and pursue any legal claim or complaint if they so desired. "The intention behind the original directive of the MFSA was unclear, and the authority was requested by the bank to clarify the scope of the directive.  The MFSA subsequently confirmed that it was not intended that the purported directive should change or modify any contractual relationship entered into between BOV and investors pursuant to the terms and conditions of the offer," the bank had said in a statement.

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Good for the investors. if BOV have funds to support MCCF and to support one of their executive manager II to receive his salary and bonus without performance than BOV should put their hands in their pockets and pay up.
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They are not the only ones who's going to open a court case against BOV !!!! To many to mention!!!!