Paul Bonello, head Finco Treasury Management, one of the most vocal organisations involved in the said his company had accepted a Bank of Valletta share buyback offer of €0.75 a share, on behalf of 72 of its clients, who as a result of accepting the deal will no longer be able to sue the BoV.
The Bank of Valletta was a joint owner of the money-losing La Valette Multi-Manager Property Fund, along with UK-based Insight Investment Management (Global).
The bank’s buy-back offer, announced on 26 May, expires today, and the bank has refused requests to extend it.
Finco has been at the forefront of investor efforts to claw back what the invstors claim is money they are entitled to because of the way the property fund had been run.
Bonello told International Adviser that he justified accepting the BoV’s share buyback deal — which he called “unfair and immoral”– on the basis that it would not be feasible for most of the retail clients who had been invested in the fund to be involved in a court battle that could last as long as 15 to 20 years, “given the age of the clients and the expense which [would] inevitably be involved”.
“On the other hand, a good number of clients with much larger holdings shall be [going ahead]” with plans to go to court, Bonello added, and he promised to provide technical assistance to them and their lawyers if asked to.
One of his central contentions has been that many of the investors in the fund are pensioners – 75% by his estimate – and poorly educated, including some who are “literally illiterate”.
At issue: fund’s mangement
The investors, including Finco, have argued that the managers of the La Valette fund had failed to adhere to restrictions outlined in the sales materials used to promote it to investors as a safe investment.
They also query why €16m of redemptions were permitted from the fund, at what they say were at inflated per-share prices, in the months leading up to the suspension of dealing.
Many investors were said to be reluctant to accept what they regarded as an inadequate price for their shares by the BoV, particularly while full details of the findings of a recent investigation by Malta’s regulator, the Malta Financial Services Authority, into the BoV fund were this week only just beginning to be made available, although even then only to certain investors.
This release of information was an about-face by the MFSA, which initially said it would only publish the conclusions of its investigation.
Bonello said he believes the BoV offer of €0.75 a share is around €0.40 a share short of where it would need to be to be adequate.
Last month, as a result of its investigation, the MFSA said that it would fine the BoV and the fund’s manager, Valletta Fund Management Ltd (VFM), €347,816 for regulatory breaches in connection with the fund, which, though not significant by international standards, was said to be the largest fine ever imposed by the MFSA 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”.
The bank said its compensation offer did not indicate it accepted that any loss by the fund was due to “any incorrect application of the investment restriction”. and that “a fuller response to the findings of the [MFSA] will follow in due course”.
