Bank of Valletta said this evening that it will appeal the findings by the Malta Financial Services Authority regarding the La Valette Multi-Manager Property Fund.
The MFSA earlier today announced it had imposed an administrative penalty of €197,995 on Bank of Valletta and €149,821 on its subsidiary Valletta Fund Management Ltd in connection with failures in the administration of the fund with regards to monitored compliance by the Property Fund with the investment restrictions in the Fund's Supplementary Prospectus.
The bank said the MFSA's conclusions were based on the Authority having taken a different view from that taken by BOV, VFM and Insight Investment (Global) Management (Insight Investment) on the proper interpretation and application of the gearing restrictions contained in the fund's prospectus.
Insight Investment is one of the largest fund managers in the United Kingdom with over £100 billion under management, and was responsible for the discretionary investment management of the Fund.
The bank noted that the differences in interpretation were already noted in its letter to investors on May 26.
"Therefore, the determination received today, though disappointing, is not wholly unexpected."
It said the MFSA decision had already been accounted for when the bank offered to buy back the shares from the investors.
"This is because the Offer price is based on the performance of the Fund as against two independent external low geared fund reference points. Therefore, the compensatory element of €0.249 per share, included in the Offer price of €0.75 per share, has already addressed the impact of the MFSA decision."
"Both BOV and VFM remain firmly of the view that the conclusions of the MFSA are wrong in fact and at law, and will be filing an appeal on the MFSA decisions pursuant to the right granted to them in terms of section 19 of the Investment Services Act," BOV said.
"In any event, BOV and VFM maintain that, even if the view of the MFSA were to be upheld, the Offer made by BOV fully compensates the investor for any loss incurred as a result of any incorrect application of the investment restriction (which is denied).
FINCO WELCOMES MFSA DECISION
Finco Treasury Management Ltd, which groups many of the property fund investors, said it had noted the MFSA decision 'with great satisfaction'.
The MFSA, it said, had published its decisions on the first and most important of the three lines of investigation, namely the question of whether the Property Fund has breached its Prospectus Investment Restrictions relating to exposure to gearing in underlying investments of the Property Fund.
"The MFSA decision vindicates the allegations and assertions of Finco and Buttigieg Refalo Zammit Pace & Associates relating to this issue, first made in July 2010, corroborated with documentary evidence of fact (such as the Offering Documents and the Audited Accounts of same underlying funds) and principles of law and jurisprudence relating thereto."
This, it said, was a landmark regulatory decision, the first of its kind in Malta.
"The gearing restrictions contained in the Prospectus are clear, objective and unequivocal. BOV ought not to have challenged Finco, the investors and the MFSA in such manifest circumstances of wrongdoing, causing unnecessary hardship to its clients, the Bank itself and Malta’s financial services industry," Finco said.
It said it was ready for talks with a BOV for talks without pre-conditions aimed at reaching a settlement.
See separate story on MFSA decision at
http://www.timesofmalta.com/articles/view/20110615/local/valletta.370728