Updated at 3.40pm - Adds government statement
Four hundred investors in a Bank of Valletta property fund have been awarded €3.4 million plus interest by the financial arbiter.
The case goes back to 2012, when the fund - which was launched in 2005 - performed badly. It was suspended in August 2008, and judicial protests and regulatory enquiries started in 2010, with the fund eventually being wound up in 2012.
The investors eventually referred to the Arbiter, who ruled on Friday that investment restrictions had been broken in the way that the fund was put together, leading to the fund's losses - which had amounted to €33 million by 2011.
The arbiter said that the behaviour of the service providers was not "fair, equitable and reasonable in the circumstances". He ordered that the investors should also receive eight per cent interest on the amount due to them backdated to the date on while the case had been instituted at his office. The compensation is to be paid immediately.
"The providers of this service are major operators in the local market and sold the La Valette Multi-Manager Property Fund extensively, affecting many small investors, and therefore have a social responsibility to bear," Reno Borg commented. Dr Borg is a former chairman of Bank of Valletta.
"The service providers should have know at the fundamental principle at the time that the investment was made, as well as now, for an operator in the financial services should be to act in a way which was professional, fair and in the the best interests of the consumer and of the market.
"... Any delay in implementing this decision could negatively affect the reputation of this banking institution," he warned.
"... This case had been dragging on for years and the current management has an opportunity to close this case once and for all."
The investors had already been made an offer by the bank in May 2011 of 75c per share. The gross cost of the offer was €14.5 million, with a total buyout value of €45 million.
However, not all of them had accepted it and an out-of-court settlement was reached for those whose interests were handled by Finco Treasury Management.
Read: Out of court settlement for La Valette Property Fund investors
The bank has already been penalised by the Malta Financial Services Authority to the tune of €203,000 in June 2012, saying that it had failed to act in the best interest of investors, as required in terms of the applicable regulatory framework.
Read: MFSA fines BOV €203,150 after third La Valette fund investigation
Bank of Valletta said that it was still reviewing the details of the decision and the board of directors would be discussing the matter and "deciding on the appropriate actions to take in the best interests of the bank".
Government statement
In a statement, the government said the decision was a result of the setting up the Arbiter's Office which gave investors the possibility to use this means of protection and revision.
The government hoped all measures would be taken for the case to be closed expediently.