Two pending investigations into Bank of Valletta’s failed property fund have been delayed by the bank’s lack of cooperation, the financial regulator said.
In an uncharacteristically blunt statement, the Malta Financial and Services Authority criticised the bank’s attitude as it announced that its investigation into allegations of insider trading would be published “imminently”.
On the other hand, its probe into the wrongful selling of the now defunct La Vallette Property Fund to inexperienced investors was at an advanced stage and a final position would be communicated to the bank by the end of the year.
The authority also revealed that BOV was attempting to keep secret pending proceedings before a financial services tribunal that are related to this allegation of so-called mis-selling.
The issue revolves around the bank’s position in respect of pending claims by investors who accepted BOV’s June 30 settlement offer but still claim full compensation on grounds that they should have never been sold the complex fund, being inexperienced investors.
The bank has consistently dismissed these claims, pointing out that the people who took the offer had signed a legal waiver on pursuing further action against it.
However, for the first time, the MFSA yesterday revealed that on June 28 (two days before the closing date of the bank’s offer) it had issued a directive to the bank “obliging it to ensure” that the rights of inexperienced investors who had wrongly been sold the fund would not be prejudiced by taking up the offer.
The authority’s chairman had gone on record saying as much before the offer expired but when the bank challenged this position after about 94 per cent of investors took up its offer on June 30, the MFSA went silent.
Yesterday, the authority said BOV had recently challenged this directive before the Financial Services Tribunal and had even asked for the proceedings to be held behind closed doors.
“The MFSA is strongly opposing these requests as it believes that justice is best served if proceedings are held in open court, and this in the interest of transparency and accountability to the public,” the authority said.
It also welcomed a recent decision by the Data Protection Commission ordering BOV to release so-called Client Fact Finds. The Fact Finds are essentially investor profiles, drawn up on prospective clients, and which some investors believe would prove that the bank knew they were ineligible to buy shares in the fund before it accepted their investment.
BOV’s refusal to release these documents had been flagged by The Sunday Times in September. The authority was being urged by investors’ representatives Finco Treasury to intervene with the bank and force it to release the documents but the MFSA gave no comment at the time.
The bank was found in breach of financial regulations in connection with the fund in the first investigation carried out. On June 15, the MFSA fined BOV and Valletta Fund Management Ltd a total of €347,816 for regulatory breaches.
The MFSA said the managers of the property fund and the bank, as the fund’s custodian, had failed “to act with the level of care and diligence required of licence holders with regards to the conduct of their business”.