The Financial Services Tribunal has rejected a request by the Bank of Valletta for proceedings to take place behind closed doors in the bank’s appeal over its failed property fund.

The tribunal pointed out that under the Maltese Constitution, court proceedings should be held in public save for exceptions made in the case of security of the state, public order, public morality or to protect minors or the private lives of persons concerned in the proceedings.

None of these circumstances was present in the case being fought by the bank, the tribunal said.

The bank complained that it had been at the receiving end of “major media attention and sensationalised press coverage” over the La Vallette Multi-Manager Property fund, which had now died down after around all but a few of the aggrieved investors in the fund accepted the bank’s settlement offer of €0.75c per share.

Publicising the appeal, BOV had argued, would expose it again to this media attention, damaging its credibility and potentially prejudicing its chances before the tribunal and the courts.

However, the tribunal rejected these pleas, pointing out that publicity of court proceedings was also a foundation of democracy, enshrined in the European Convention on Human Rights.

On top of the request to have the actual tribunal proceedings in camera, BOV had made the unprecedented request in October to have the tribunal suppress any mention of the appeal, going so far as to ask it not to post a notice of the appeal on its website, as it was bound to do under financial laws.

The notice is still posted on the website. The tribunal also upheld a request by about 100 investors in the failed fund to intervene in the case alongside the Malta Financial Services Authority.

The bank’s appeal 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, in its November 3 statement, for the first time the MFSA 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 bank is appealing against this directive, saying it is unfair. However, it is also questioning whether the authority’s directive should be considered such or merely a “recommendation”.

Now, in the appeal process the bank will also have to face some 100 investors, represented by Finco Investments, as well as the authority. Investor representative Finco Investments had long highlighted the problems with the timing of BOV’s financial offer – which expired before the authority concluded any of three investigations it had launched into the bank’s handling of the fund. It argued that BOV should have been made to hold its offer till the MFSA concluded all of its probes.

Instead, investors were faced with a Hobson’s Choice, Finco managing director Paul Bonello had argued, since turning down BOV’s offer before knowing the outcome of the investigations meant they could have faced the prospect of having to take on the bank in court without the authority’s backing.


BOV had requested to have the tribunal suppress any mention of the appeal


Since the offer expired, the MFSA found the bank 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.

However, there are two investigations pending which have not yet seen the light of day despite repeated statements by the MFSA to the effect that they should bepublished soon.

Recently, the bank was again fined some €175,000 in respect of regulatory breaches related to other financial products it was selling. However, this was unrelated to the property fund.

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