The fine levied against the Bank of Valletta (BoV) and Valletta Fund Management Ltd was €347,816, which, though not significant by international standards, is said to be the largest fine ever imposed by the Malta Financial Services Authority in such a case.
In a statement on its website, the BoV, Malta’s second-largest bank, said it would appeal the ruling, arguing that the MFSA’s conclusions were “wrong in fact and at law”.
A compensation offer the bank last monthput forward to investors who lost money in the Valletta Fund Management fund would still “fully compensate” such investors “for any loss incurred as a result of any incorrect application of the investment restriction (which is denied)”, the bank added, referring to a central claim by the out-of-pocket investors that the fund’s managers had breached restrictions outlined in the fund’s prospectus.
“A fuller response to the findings of the [MFSA] will follow in due course,” the bank’s statement concluded.
Valletta Fund Management was set up in 1995 and is jointly owned by Bank of Valletta and UK-based Insight Investment Management (Global) Ltd, according to its website.
Offer
Last month, BoV said it would shortly offer to acquire all of the outstanding shares held in the troubled La Valette Multi Manager Property Fund for €0.75 a qualifying share, at a cost to the bank of €14.5m, which it said would be taken as a pre-tax charge against profits. At the time, Bank of Valletta chairman Roderick Chalmers said the offer was being made “without prejudice” and “without admission of liability”. In a statement, the bank described the share buyback scheme as a “bona fide effort by the bank to provide investors with an opportunity to settle matters that are in dispute in a fair and equitable manner”.
As reported, hundreds of Maltese investors are seeking a return of their investments, plus interest and expenses, on grounds that they were misled by the fund’s managers as well as by the Bank of Valletta, as the fund’s custodian, about key details of the way the funds were managed. The bank has always denied the claims.
Finco Treasury Management Services, a Maltese wealth manager which had clients in the La Valette fund, has been one of the most vociferous critics of the way it was managed. Finco has argued that the funds in which the La Valette fund-of-fund was invested had been excessively geared, in violation of the fund’s investment prospectus.
Among the funds La Valette lost money in was the Belgravia European Property Fund, one of a number of Belgravia entities that ran into difficulty following the death at age 40, in May 2008, of the company’s founder, Duncan Hickman, and the subsequent financial crisis.
At one point Belgravia Financial Services Group had been said to be in line for acquisition by Plus Markets-listed First London Securities. It also made headlines in 2006, when it made a reported £130m to £150m bid to buy the Newcastle United football club.
