One in every four investors who bought into a tainted Bank of Valletta property fund did not meet the required “experienced investor” entry threshold and has now been further compensated by the bank.
Of the 2,258 case files provided to independent assessors Mazars, 569 were found to have been inexperienced investors at the time they bought into the La Valette Property Fund.
Mazars found that 1,190 investors qualified as experienced investors, while another 469 were proven to be “execution only” investors and were therefore not eligbile for further compensation.
Execution-only investors are those who did not seek or pay for investment advice.
Details emerged yesterday after a Malta Financial Services Authority statement announcing BOV’s additional compensation payments.
The statement was accompanied by an abridged version of the Mazars report.
The bank’s misselling of the La Valette Property Fund has cost it record fines running into hundreds of thousands of euro, together with even larger sums in compensation to investors.
Last June, an MFSA investigation found that the bank had misled customers in its selling of the fund.
It also ordered an independent review of client files and Mazars was tasked with pinpointing investors who should never have been sold the property fund in the first place as they were not experienced investors.
That review was concluded last month. BOV has now compensated most La Valette Property Fund investors found to have qualified for further payment. Cheques for the others are in the post.
The Mazars report makes it clear that the firm was tasked with identifying experienced investors according to existing MFSA criteria.
It also notes that, in cases where evidence was ambiguous, investors were classified as inexperienced.
According to the criteria in place during the time when the property fund was being sold, an experienced investor had to either have worked in the financial services sector for a year, have a history of being active in property funds or securities or invested at least $50,000 over the previous five years.
Last December, BOV chairman Fredrick Mifsud Bonnici apologised for the bank’s actions and vowed to “do better in future”.