The Malta Financial Services Authority said yesterday that it would only be in a position to issue a statement on its findings into the BOV’s La Valette Property Fund once the investigation has been completed.
Final representations from Valletta Fund Management and Bank of Valletta were expected by next Monday, the MFSA said.
It said the law did not authorise it to make a public statement before a “fair and exhaustive” regulatory process has been concluded, with clear and specific findings.
“Hasty and incomplete public statements on regulated entities, especially where these are publicly listed and traded companies, could damage the integrity of Malta’s financial market to the detriment of investors,” the MFSA said.
It added that “undue pressure” through the media to hasten the investigative process was not helpful and might confuse investors.
Labour finance spokesman Charles Mangion last Monday called for the publication of the results of the MFSA investigation into the fund, although the authority did not refer to his statement yesterday.
In a separate statement the bank did, however, saying the investigations being carried out by the MFSA were ongoing and have not been concluded. “No investigation has been concluded so far, and the bank continues to provide the authority with every assistance and co-operation in this regard.”
BOV noted that last week it had explained that differing views appeared to be forming between the MFSA and the bank around the proper interpretation and subsequent application of the gearing restriction contained in the prospectus – and that the bank and the authority may have to agree to differ on this matter.
The authority’s inquiry, which has been going on for nine months, concerns an alleged breach by the bank of the investment restrictions in the fund’s prospectus when taking on bigger risks than permitted.
Last week, the bank offered investors a one-time cash settlement offer of 75 cents per share with an estimated total buy-out of €45 million, of which €14.5m is due as compensation for the fund’s underperformance.
However, investors have described the bank’s offer as a ruse, insisting they were being “forced” to accept it without having the financial authority’s inquiry in hand.
BOV said that, notwithstanding the fact that the bank and its advisors continued to hold firm views on the proper application of the restriction, it had elected to make the offer in “a bona fide attempt” to provide investors with an opportunity to secure an early settlement “on a fair and equitable basis rather than facing prolonged contentious legal action”.
BOV said it understood that certain investors may wish not to accept the cash and instead choose to take legal action or register a complaint. “These investors are perfectly entitled to follow such a course of action should they so desire, and Bank of Valletta will fully respect their decision.”