An investigation into whether some Bank of Valletta investors had inside information when they disposed of their shares in a property fund that went bust will be concluded “soon”, according to the financial services authority.
Malta Financial Services Authority chairman Joe Bannister would not give a specific target date for the conclusion of the investigation when contacted yesterday.
“The MFSA is bound by the law in what it can say and do, but it is carrying out its work and the investigation will be concluded soon,” Prof. Bannister said.
The regulator is working on two pending investigations, which started last year, into allegations of wrongdoing linked to the La Valette Multi-Manager Property Fund.
The more serious of the two is about allegations that some BOV investors had inside information and sold their shareholding in the ill-fated property fund just before the bank froze the fund in the summer of 2008. Hundreds of investors were left high and dry, losing millions of euros in the process.
The other investigation is into the bank’s selling techniques when it marketed and sold the property fund to investors. Given the nature of the fund, the bank’s prospectus had made it clear it was intended for experienced investors. Some of those who had subscribed to the fund were ordinary investors who put their life savings in it after being sold the product by BOV.
“The investigation into allegations of mis-selling is lengthy because the MFSA has to look into each of the individual claims,” Prof. Bannister said.
In the only investigation concluded to date, the MFSA said the bank had breached the investment regulations listed in the prospectus when the property fund invested in high-risk sub-funds that went bust. The regulator fined BOV €347,816 for the breach.
The bank initially said it would appeal the decision but eventually decided against, even though it continued defending its position that it had done nothing wrong.
In June, 94 per cent of investors in the fund took up the bank’s offer of a final settlement by accepting 75c per share that covered the market price of their devalued investment and compensation for the fund’s underperformance. Investors who took up the conditional offer agreed not to sue the bank for damages.