Investors in Bank of Valletta’s underperforming property fund were yesterday urged to reject the bank’s “indecent proposal” of a buy-out and told that if they accepted it they would be disrespecting themselves.
Insisting that there was clear evidence of mis-selling and insider trading in the fund, Paul Bonello from Finco Treasury Management, which represents investors in the La Valette Multi-Manager Property Fund, said they were being asked to take up an offer on which they had little or no information.
He said those taking up the offer would be giving up their right to take legal action against the bank, irrespective of any findings in the inquiries carried out by the Malta Financial Services Authority.
He, therefore, advised a hall packed with investors at the Catholic Institute in Floriana yesterday evening to hold onto their shares at least until the MFSA published its findings on the administration of the fund.
He said that Finco, through its legal adviser Ian Refalo, had written to the MFSA calling on it to publish its findings by Monday and warned it of legal action otherwise.
On Monday, the MFSA is expecting the bank to make its final representations on its inquiry report. The authority said on Tuesday that only then would it be in a position to issue a statement on its findings.
Finco’s clients are among several groups of investors that have filed judicial protests over the fund, blaming poor practices for the loss of large investments and claiming they had been misled.
Mr Bonello yesterday called on the MFSA to instruct the bank to withdraw the offer it made last week, giving investors €0.75 per share to draw a line under the dispute. Although he was happy that BOV had offered 75c per share when the shares now had a value of 25c, this was not enough.
The MFSA has so far concluded one investigation, although the report and the findings have not been published. He said the MFSA was legally bound to pass on a copy of this report to Finco, as representatives of the investors and as the entity making the complaint.
The regulator is conducting two other inquiries that have not yet been concluded. One concerns the selling techniques used when the fund was being marketed by BOV.
Another, more serious 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.
Mr Bonello, who is representing some 500 investors, said the bank’s settlement offer fell short of expectations and should be suspended. “Last year, the bank told us to put up or shut up and now it is telling us to take it or leave it. We are now telling it to pay up and shut up,” he said.
He explained that in other countries financial institutions were made to pay back the initial capital invested with interest.
The bank’s offer expires on June 30 and the bank has reserved the right to withdraw it if there is less than 70 per cent take-up.
This, Mr Bonello pointed out, was only an excuse to force shareholders into accepting the offer because if it wanted to, the bank had enough shareholders of its own to surpass the 70 per cent mark. He said that, in theory, Malta had state-of-the-art legislation intended to protect investors but, in practice, the MFSA did not seem to have the personality to implement it.
“I said it and I will repeat it: the MFSA does not have personality. It is trembling because there is a big-head on the other side... Who are you protecting? It took the MFSA nine months when it took me three to find all the evidence they needed,” he said.
Mr Bonello also called on the Prime Minister to support investors as the opposition had done.