The Malta Financial Services Authority (MFSA) is statutorily obliged to regulate financial services in Malta and promote the general interests and legitimate expectations of consumers of financial services. It is an autonomous, impartial and self-funding body which carries out its functions free of political influence and influence from licence holders.
The Authority recognises that investors in the La Valette Multi Manager Property Fund (LVMMPF) and in other securities, such as perpetual or hybrid securities, have suffered as a result of mis-selling and other breaches of licence conditions by the Bank of Valletta group of
companies (BOV). These investors are fully aware that BOV and its subsidiaries have already been fined more than Euro 700,000, for these breaches, and the Authority mailed a detailed report, in Maltese and English, to all investors explaining its conclusions.
In addition to sanctioning BOV, the Authority has engaged a professional services firm, at the expense of BOV, to carry out an independent review of each investment in LVMMPF. The file review which is currently being undertaken will result in a list of investors who should be paid compensation. The Authority has required BOV to pay further compensation to those investors, as well as others regarding whom an agreement to pay compensation has already been reached between the Authority and the Bank.
In relation to investments in Lehman and other hybrid and perpetual securities, the Authority clearly stated in its release of 5 January 2012 that, on the basis of its findings, it had recommended that the bank compensate those aggrieved investors. The Bank has already reached a settlement with a number of those investors. In many other cases, however, the Bank is disagreeing with the Authority’s findings and recommendations, and refusing to offer adequate compensation. The MFSA findings and sanction in this area have been appealed by the Bank and the judicial process is taking its course.
The Authority believes that it is right to first exhaust all possible avenues to achieve restitution, including an insistence that BOV shoulder its responsibilities towards these investors, before going to the courts. It is worth noting that, due in great part to more than 20 pending court cases, depositors of the Bank of Industry, Commerce and Agriculture (BICAL), which suspended its operations in 1973, are still waiting for the last 20% of the capital deposited with that bank. There is therefore no guarantee that action through the courts against BOV will result in quick payments to aggrieved investors.
The MFSA has never shirked its responsibilities at law, and will not hold back from using all its regulatory and supervisory powers, at the appropriate time, and not before it has explored all other available avenues.
