Property fund investors urged to refuse 'indecent proposal'

Hundreds of investors in the under-performing La Valette Multi-Manager Property Fund were today urged to reject the 'indecent proposal' made by Bank of Valletta, which last week offered buy-out and compensation.

Finco Treasury Management managing director Paul Bonello told the investors, who filled the main hall of the Catholic Institute, that they should hold on to their shares at least until the MFSA published its findings on the administration of the fund.

He said that Finco, through its legal adviser, Prof Ian Refalo, has written to the MFSA calling it to publish its findings by Monday, and warning of legal action.

The inquiry, which has been going on for nine months, concerns an alleged breach by the bank of the investment restrictions in the fund's prospectus when taking on bigger risks than permitted.

The MFSA is reportedly also investigating the selling techniques used when the fund was being marketed by BoV. Another inquiry deals with allegations that some investors had privileged information that allowed them to redeem shares just before the fund was suspended in August 2008.

BoV said last week that the MFSA and the bank were applying a different interpretation to the investment restrictions listed in the fund's prospectus.

The bank said it disagreed with the MFSA's conclusion but decided to settle the dispute by offering investors a take-it-or-leave-it cash settlement of 75c per share, which will have to be taken up by June 30.

See also - Investigation into property fund not concluded yet

http://www.timesofmalta.com/articles/view/20110531/local/no-mfsa-investigation-into-property-fund-concluded-yet-bov.368241

The total buy-out is expected to cost the bank €45 million, of which €14.5m is due as compensation for the fund's under-performance.

Mr Bonello said that the prime minister should intervene in the case, and the government should take a position as the Opposition had done.

He complained about foot dragging by the MFSA and said he had, within three months, found evidence related to what the MFSA was investigating.

Bank of Valletta's offer to investors, he said, was an 'indecent proposal' and 'immoral'. Although he was happy that BOV had offered 75c per share when the shares now had a value of 25c, this was not enough, given the investment that had been made.

Investors, he said, should refuse the BOV offer, at least until the MFSA report was published. The chairman of the MFSA, he said, had publicly declared that an announcement would be made by Monday. Investors, Mr Bonello said, could not act until they knew the full picture.

Finco, he pointed out, had sent eight judicial protests, 59 letters and a number of dossiers with information on the fund to the MFSA, and in reply received only one substantive letter. He hoped that no one was being protected.