An audit firm chosen by the financial services regulator will soon start reviewing the client files of an ill-fated property fund administered by Bank of Valletta.

The announcement was made yesterday by the Malta Financial Services Authority, two months after it found BOV in breach of regulations when it sold the high-risk fund to inexperienced investors.

The authority fined the bank €200,000 and said it would appoint an independent company to determine who of the investors warranted additional compensation.

The international audit firm, Mazars, will now start reviewing the bank’s files and determine whether the clients satisfied the regulatory condition of having invested $50,000 (€40,000) over the previous five years, when they signed a declaration claiming they were experienced investors. BOV has to fork out the cost of engaging the company.

Inexperienced investors will have to be compensated at €1 per share, less any compensation paid out last year.

However, the method chosen by the MFSA was yesterday contested by Paul Bonello of Finco Treasury Management, which has represented various investors in the La Valette Multi-Manager Property Fund bitten by the bank’s mistakes.

Mr Bonello said the method was “vague and incorrect” because it did not distinguish, among others, between investments held separately or jointly by spouses.

The risk is that many investors who were inexperienced would not qualify as such, he added.

“It has to be emphasised that very often BOV client fact-finds put together investments held by one spouse with investments held jointly with another spouse and yet again with investments held in both names, which is not in line with the experienced investor definition requirements,” Mr Bonello said.

The property fund went belly-up after it invested in high-risk sub funds that went bust. BOV suspended trading in the fund’s shares in August 2008, leaving investors high and dry.

Three separate investigations by the MFSA found the bank guilty of breaching regulatory procedures on various counts.

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