Forty-two clients of Maltese Cross Financial Services Limited filed a judicial protest against the Malta Financial Services Authority holding it responsible for the losses they suffered.

The clients claimed that the authority failed to carry out the necessary checks and site visits over the past seven years and, as a result, failed to flag the financial situation of the company.

As a result of this "gross negligence", the clients had lost their investments.

The clients said they were aware that the authority could rely on the immunity granted to it by law but warned that this immunity would no longer be valid in cases of mala fede (bad faith).

The former director of Maltese Cross Financial Services Ltd, Jean Claude Bugeja, is currently facing court proceedings for misappropriation and defrauding two of his former colleagues and directors, Robert Cutajar and Stephen Spiteri, and about 220 clients out of some €4 million.

In a previous sitting, Police Inspector Ian Abdilla said that, in the statement Mr Bugeja - 42 of Ghaxaq recounted how a wrong decision in 2008 spiralled out of control and led to Maltese Cross Financial Services Ltd facing a shortfall of €6.2 million.

In the judicial protest the clients noted that it emerged that the problems started in 2008. The protest was filed against the authority, the Investor Compensation Scheme and the Registrar of Companies. 

The clients said that since 2008 the MFSA - a company with 230 employees - had last carried out an inspection in 2008 and had failed to check out the situation since 2009. In fact the authority was notified about the alleged misappropriation when the two directors filed a report this year.

The clients also noted that on August 12 this year the authority issued a notice saying that Mr Bugeja was no longer authorised to act as the director, compliance officer, money laundering reporting officer and to give financial advice.

This meant that the authority had, in the past, acting irresponsibly by allowing Mr Bugeja to take on all those roles that did not allow for internal checks and controls.

In the protest the clients also asked to be given access to various document including the annual return signed by the directors and auditors since 2008. They also asked for amendments to be made to the law regulating the Investor Compensation Scheme to as to clarify the process used when making a claim as the current process was open to wide interpretation.

Lawyers Adrian Delia and Kris Scicluna signed the protest.