Bank of Valletta has rejected the suggestion that the level of redemptions experienced in the La Valette Multi Manager Property Fund was due to BOV staff and their families or friends being given access to privileged information.
In a letter sent to all investors in the La Valette Multi Manager Property Fund, chairman Roderick Chalmers said:
“The bank, having carried out its own investigation into the matter (which it has shared with the MFSA), firmly believes that it has acted properly and in good faith at all times, and that it took all the appropriate measures to guard the confidentiality of deliberations that necessarily took place concerning the suspension of dealings in the fund.”
Mr Chalmers stated that since the bank's offer concerning the Property Fund was launched on May 26, the bank had significant contact with a number of investors.
In his letter, Mr Chalmers provided brief and concise answers to three issues that have formed a common theme in the questions asked by investors.
The Redemptions investigation
Mr Chalmers said BOV was on public record as having stated that the level of redemptions experienced by the fund in 2008 was far from extraordinary – and simple research showed that the proportion of redemptions experienced by the Fund was much in line with that experienced by other Funds in Malta at the time.
He highlighted the importance of relating the level of redemptions to the size of any particular fund.
“I can assure you that BOV, more than anybody else, wishes to see the Redemptions investigation brought to a rapid conclusion – and we have expressed this view to the MFSA, and have provided them with all the assistance and information that they require in this regard,” said Mr Chalmers in his letter.
The chairman reiterated that the bank will take the most serious view if, and he stressed if, any individual within the bank is shown to have acted in breach of trust concerning the use of confidential information.
Asked why BOV had not waited for the final MFSA conclusion on redemptions before commenting on the matter, Chalmers said that certain parties who were now noisily objecting to BOV acting before final conclusions were forthcoming from the Authority, had not themselves felt obliged to await these conclusions before time and again repeating in a grossly unprofessional and wholly improper manner, wild and unsubstantiated allegations concerning redemptions in the Fund. It was only proper therefore that the Bank should respond.
MFSA conclusions
Mr Chalmers explained that the MFSA had not yet issued a final report. This was confirmed by a public statement issued by the MFSA, which stated that BOV had been given until June 6 to make further submissions.
The MFSA stated that they will make a final determination following their consideration of these further submissions.
The chairman said it was clear from the bank’s earlier correspondence with the MFSA that the two sides have been taking different positions on the proper interpretation of IR(v).
In this regard, he explained that apart from offering cash for the currently illiquid Side Pocket, the bank’s offer price of €0.75 per share included a compensatory element of €0.24,9 per share.
This element was reached by comparing the performance of the fund against two external low geared fund reference points. The bank had, therefore, quantified the underperformance of the fund (for whatever cause), and wasoffering immediate compensation for this underperformance.
So, in effect, the offer price, inter alia, included any impact on the performance of the fund arising from the disputed IR(v) issue, thus addressing the matter should the MFSA ultimately disagree with BOV’s position on this question.
Control of the Fund
Mr Chalmers stated that BOV does not have control of 70 per cent of the fund as had been inferred by certain parties.
He said that it was always made absolutely clear that each and every investor is completely free to accept or reject the offer.
Therefore, if any investors decided to pursue a legal claim, they were free to do so – and this right would remain intact irrespective of the percentage of investors who choose to accept the offer.
Likewise, if any investors felt that they wished to pursue a “mis-selling” complaint, they were also fully entitled not to accept the offer, and to pursue their complaint. In this regard, each complaint would be considered on its own merits on a case by case basis, in accordance with established procedures.
Mr Chalmers encouraged investors to contact their BOV branch should they require further information. He encouraged them to seek independent and competent legal and/or financial advice in respect of the offer and its implications.