The Investor Compensation Scheme has so far paid out over €2 million to customers of failed investment firm Maltese Cross Financial Services – but the amount could go up even further.
The maximum compens-ation that may be payable by the scheme amounts to €20,000, or 90 per cent of an investor’s eligible claims, whichever is the lower – but sources have confirmed that there are investors who had over €500,000 invested.
Since the scheme is subrogated into claimant’s rights up to the maximum claimed, the only way that they could recoup any further funds would be if they took court action – or through out-ofcourt settlements.
This basically means that the victims can only take action for amounts over the €20,000 they will get through the scheme.
The scheme, which is being used for the first time, can itself institute legal action for the recovery of the funds it will pay out.
Last August the Malta Financial Services Authority (MFSA) established that Maltese Cross Financial Services was not in a position to meet its obligations. The shortfall was subsequently found to be around €6-7 million.
MCFS director Jean Claude Bugeja is currently in court on the matter, charged with fraud and misappropriation. His assets have been frozen and the court has allowed him a basic allowance of €14,000 a year on which to live.
The scheme has already handled around 200 claims, but investors had until the end of January to lodge their claims and the additional ones submitted by the deadline are now being processed, according to the MFSA. Until now, the total number of clients has been estimated at around 220 but the MFSA, which has this information, has never divulged it.
The Investor Compensation Scheme is a rescue fund for customers of failed investment firms which are licensed by the MFSA. It pays compensation if a licensed investment firm is unable or likely to be unable to pay claims against it – usually when the licensed firm stops trading or becomes insolvent.
The scheme is managed by a management committee appointed by the MFSA.