BOV faces judicial protest by 170 investors
Another judicial protest against Bank of Valletta has been filed by 170 investors over a property fund once valued at €84 million but now worth only €30 million.
The 170 investors are shareholders in La Valette multi-manager property fund, a sub-fund of La Valette Funds Sicav plc. The fund was managed by Valletta Fund Management, owned by Bank of Valletta and Insight.
The investors claimed that VFM in its capacity as director and manager of the sicav, significantly failed to exercise the skill and diligence required of it in the selection of the investments of the fund and in its subsequent monitoring.
The failings were among the main reasons for the very substantial damages suffered by the investors, independently of any possible negative trend in the property market.
The affected investments included a number in the Belgravia Funds, made at a time when there were sufficient indicators to show that it was inappropriate to entrust the claimants investments in the fund with Belgravia.
In its capacity as custodian, BoV was specifically responsible to ensure that the investment restrictions of the fund were observed, the investors said.
These included the restriction by which “the limit on the level of gearing that the fund’s underlying real estate property funds may be exposed to is of a maximum of 100 per cent of their respective net assets”.
A similar protest against the bank had been filed by 72 investors last month.
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Gustav Svensson
Aug 19th 2010, 12:52
How can this happen? Not long time ago Times published an article saying that the property prices was on their way up again, also Frank Salt confirmed this! Hahahaha Malta is funny!
Anthony Farrugia
Aug 19th 2010, 12:45
As Warren Buffet once said "Never invest in what you don't understand" !
H Zammit
Aug 19th 2010, 17:44
I agree perfectly with you. Don't trust your earnings in the hands of others. Do with them what you know best. Don't give in to all these investment so called experts. They know nothing about the instability of the frail market. All they care about is how they (not you) will make more money. Lets face it who is making money? Banks, insurance companies etc.
Randolph Cini
Aug 18th 2010, 11:49
@m.cachia....I agree with ye about MFSA ... always silent ....What does MFSA has to tell us about this: http://notiziarioassicurativo.wordpress.com/2010/05/06/lisvap-ferma-la-compagnia-eig-vietato-stipulare-nuovi-contratti-in-italia/ ......or top people at MFSA are loosing time playing musical chairs!!!
Dominic Vella
Aug 18th 2010, 11:19
As usual, the general public invest into bubble fads right at the peak when the smart money is already leaving. This fund had leverage on leverage- i.e. it took investors money and borrowed more to invest in a selection of underlying property funds that also borrowed money.
I believe the fund offered the investors the ability to sell up and leave every 2 weeks. Therefore I don't see that any investor can complain beyond the first 2 weeks of losses after they invested through a financial advisor. To sit on their losses hoping they would bounce back is their own fault.
Anthony Farrugia
Aug 18th 2010, 09:32
Certain type of investors would be better off if they invest in bank deposits or Government stocks.What about the effects of the economic crisis which started in 2007 on these investments ? Is it a question of putting all eggs in one basket? What about portfolio diversification ?Investors should never take anything for granted, read and understand any form BEFORE signing it and last ,but not least, realise that they are in for the long term and that the value of investments can go down as well as up !
GVella
Aug 18th 2010, 09:24
If I am consulting a "Financial Advisor", I expect to be given sound, informed, knowledgeable and unbiased advice about how best to invest my money. Unfortunately these so-named advisors are often working to selling targets or worse still get commissions from products that they sell. This is unethical, leads to situations where investors are justified in feeling that they might have been purposely mislead and is an area which the appropriate regulator should look carefully into.
G. Camilleri
Aug 18th 2010, 07:59
Stop investing with local banks. They are just stupid in doing speculation with no technical analysis.
You can buy some books which will teach you how to trade forex, stocks, futures, and be a real successfull trader yourself, by investing with forex/stocks/futures brokers abroad of course at your own risk, cos you will be trading it.
Trading with a local bank is no much better than trading yourself. You can do it, like many do and earn the living by just trading.
Trading is highly risky so always risk what you are able to loose, without going insane.
This is the best advise I can give to all the investors.
J. Pace
Aug 19th 2010, 01:53
Well said, great advise. What about their astronomical charges? You can trade shares from the comfort of your home with just $1 per order. Then just compare that with what you are charge with local banks!
Just do quick google search on forex / stocks and you will find a lot of free information and you will be much more educated than most people employed for such jobs in Malta.
For example this is just a great introductory course which is free to forex trading - http://learntotradeforexfree.com/forex-for-beginners/
Charles Grixti
Aug 19th 2010, 14:31
In case you are not aware, the same thing happened to "investors" all around the world. It has nothing to do with local banks but it is the nature of the beast.
If you do not have money to spare and cannot afford to lose it, then get Government Bonds and Term Deposits, leave the 'gambling' to the big boys that can afford it. The one thing I can blame banks and Government Regulators for though is for offering these type of investments to us 'common folks' with promises of great dividends, when they should have been more cautious and conscientious, instead of playing with and profiting from peoples' ignorance and greed.
G Caruana
Aug 18th 2010, 01:09
Can someone from this group of investors give a contact number or address so that other investors can join the group?
B Borg
Aug 19th 2010, 12:57
How can I join this group?
Christopher Micallef
Aug 17th 2010, 23:24
While the specific points of this court case have yet to emerge, these investors follow the lead set by Finco (a private investment company) a few weeks ago in holding BOV responsible for this particular investment. While in general, investment values could go up as well as down and the past is not a guarantee of the future, I feel that in this particular case, the clients may have some reason for holding BOV responsible.
Particularly, the conditions to be followed by the investment fund as set out in the prospectus have to be followed according to the law. In this case, the gearing limit may have been breached with BOV not taking the necessary steps. Apart from this, it also failed to take due action (by withdrawing from Belgravia funds for example), and did not duly notify its customers. Thus, I think that the investors might have a very good chance of beating BOV at the courts and claiming compensation.
On the more general note of the investment market, it is high time MFSA assesses the situation. Bank employee compensation practices, employee qualifications and training and investment fund marketing all come into the picture.
T Cassar
Aug 17th 2010, 22:45
it is interesting to point out that many clients who bought this fund where signing a declaration that he/she is a professional investor since the fund was not appropriate for the common investor.
I wonder how many shareholders of this fund knew that they signed this declaration, given the way it was being sold aggresivley
Luigi Cassar Manghi
Aug 17th 2010, 22:36
Good luck to the 170 investors in their attempt at getting back a good part, if not all, of their original investment, within a reasonable time. If there was malpractice they deserve compensation irrespective of market forces that drove the property prices down. If malpractice can be proved then be it so, and the offenders have to pay. Malpractice has noting to do with the inherent risk of market price movements. One possible cause of malpractice is non-observance of the agrees terms of the prospectus. Let us see whether BOV can defend such accusations.
c.cachia
Aug 17th 2010, 22:02
I lost 200 quid at the casino last week....... I think I'll sue them..... for my 200 quid and for the cost of a shrink due to the stress :)
R.Lewis
Aug 18th 2010, 10:13
Out of subject. Who told you to gamble. For your information there is a big difference between gambling and investing.
John Bezzina
Aug 19th 2010, 01:11
To be honest, I do not think that there is such a big difference.
D Aquilina
Aug 19th 2010, 12:27
good one :) and yes... investing in non-guaranteed funds is pretty the same thing as gambling....
george cefai
Aug 17th 2010, 20:58
WHat about the other local banks?
C Cassar
Aug 17th 2010, 21:18
What about them?
george cefai
Aug 17th 2010, 21:40
@c cassar
Do you think that only BOV do wrong investments? I had a similar experience with another local bank. I tried to take steps but was shunned
malcolm seychell
Aug 17th 2010, 18:47
I am sorry, but when you invest you are taking a risk especially in funds.
So no way should the government or BOV give anything to the investors.
Peter Korsten
Aug 18th 2010, 08:23
What does the government have to do with this?
Anyway, in other countries, investors have sued banks over investments gone bad, and in certain cases won. It depends from one case to the next.
My wife and I had money in a fund, but pulled it out (and as it happens, just before the stock market collapsed) because we were of the opinion that the bank had no idea of what it was doing. If the market is consistently going up, the value of your investment should not go down.
C Cassar
Aug 17th 2010, 18:37
They haven't got a chance and clearly don't understand what investing in such a fund actually means. The values can go DOWN as well as up.
I suppose if it had increased substantially in value, BOV could have taken its fund investors to court to claim some of the profits back? Yep, sounds stupid but exactly the same as the action that these novice investors have initiated just because they haven't made any money.
matthew tanti
Aug 17th 2010, 17:08
you should listen to both sides of the story before judging, at this stage these are only allegations.
Andrew Cachia.
Aug 17th 2010, 20:53
once bitten twice shy!
R.Lewis
Aug 17th 2010, 21:01
Most probably you are saying so because you dont have money invested in this fund. I don't think these 170 investors are crazy. This is similar to the Vilhena Diversified Multi Manager Income Fund. Every euro invested in this fund 3 years ago is ONLY worth €0.6798. That is daylight robbery. If the financial advisers have no knowledge concerning this type of financial investments they should find another job. I do hope that we hear of another judicial protest by investors who were advised to invest in this fund. It doesn't make sense that at the end of the Bank's financial year you read that the Bank made about €28m profit when his customers lost so much money. Is there a Banking Ombudsman in Malta, like the one in UK.
M. Cachia
Aug 17th 2010, 16:47
Way to go ...
THis follows hot on the tail of last month's story of a man who is holding BOV responsible for his Lehman Brothers investment
http://www.timesofmalta.com/articles/view/20100723/local/man-holding-bov-responsible-for-lehman-brothers-investment
BOV needs to employ some serious advisors, while the public should know that expert advice on their money (and their future) is usually not taken from clerks who would have undergone a few weeks of training. That is what is happening in our banks and the MFSA remains silent on all of this.
J.Bonnici
Aug 17th 2010, 18:51
M. Cachia I fully agree. After a couple of weeks training bank clerks/supervisors are '' promoted'' to Financial Advisors.
They will sell you any Bank product irrespective of risk as their only goal is to reach their respective Sales Targets otherwise their Performance Grading will suffer i.e. no/reduced bonuses/salary increases.
T Falzon
Aug 18th 2010, 08:28
This the tip of the iceberg....
E. Borg
Aug 19th 2010, 13:40
There are some very serious accusations against BOV in the protest which accusations can have a very significant impact on BOV. I see that there is no other alternative to BOV but to seek an ageement for the settlement of these claims for, as each day passes, this is causing untold harm to BOV. It is clear that the management of these funds left much to be desired.By the way where are the Regulators in Malta? There are accusations concerning licence conditions and restrictions on the fund which MFSA is bound to reply to. Are Regulators in Malta fulfilling their role or is it a sheer waste of taxpayer's money?