Bank of Valletta came out fighting as the financial services regulator kept mum yesterday, 24 hours after a bank fund director was publicly reprimanded for redeeming shares in a property fund that was suspended.
The whole affair took a new twist when the bank yesterday issued a statement quoting from an investigation, which the Malta Financial Services Authority has not yet made public and which the bank said absolves it from the serious charge of insider trading.
The investigation concerns allegations that some shareholders in the La Valette Multi Manager Property Fund had privileged information when they redeemed their holdings before the bank suspended trading.
According to the bank, the investigation “did not reveal any evidence to substantiate the claim that BOV staff or persons connected to them used confidential information as a basis for their decisions to redeem their shares from the fund during the months prior to suspension of redemptions that took place on August 8, 2008”.
The statement comes after the MFSA on Thursday published on its website a reprimand it handed down on January 5, to La Valette Funds Sicav director John Ripard.
Mr Ripard was reprimanded for disposing of his holdings in the property fund before the bank suspended trading “while in possession of sensitive information which was not available to the public and which he became privy to in his capacity as a director of the La Valette Funds Sicav”.
As a result, Mr Ripard had also “voluntarily tendered his resignation” from the post of director.
The bank said that Mr Ripard denied the disposal resulted from his having any sensitive information and it made no reference to the MFSA’s findings.
Questions sent to the regulator, including on when it planned to publish its findings, remained unanswered at the time of writing. Neither could MFSA chairman Joe Bannister be contacted.
The confusion caused by the two seemingly conflicting statements has raised questions in financial circles about the regulator’s role.
Paul Bonello, the managing director of Finco Trust Group, said yesterday he could not believe how the investigation’s conclusions were published by the bank and not by the MFSA.
“The authority has repeatedly told us that the publication of the report is imminent but instead we end up with the investigated party publishing presumably selected findings of an investigation we have not yet seen,” Mr Bonello said, reiterating his call for the investigation to be published.
Mr Bonello said the bank statement did not deny that BOV staff redeemed shares in the property fund but that they did not do so as a result of confidential information. The fact remains that investors who redeemed their holdings before the property fund was suspended did so at a price that was 400 per cent higher than the effective price that other shareholders had to contend with when a couple of months later the bank suspended redemptions.”
Some €16 million were redeemed before the fund was suspended and Mr Bonello estimates that €12 million of these were a result of the excessive pricing.
The property fund went belly up and investors lost millions of euros only redeeming a small portion of their investment last year when the bank offered a one-off settlement.
ksansone@timesofmalta.com