A total of €3.4 million plus interest has been awarded to 400 people who invested in a Bank of Valletta (BOV) property fund.
The decision was taken today (Friday) by the financial arbiter and closes off a long chapter into disputes raised as a result of the way the fund was managed.
It was initially launched in 2005 and was closed off in 2012 due to a bad performance. The fund was suspended in August 2008, with judicial protests and regulatory enquiries launched in 2010.
Following a complicated back-and-forth, investors eventually brought their case to the financial arbiter who today concluded that restrictions surrounding the way in which the fund was put together were breached, resulting in the fund’s losses.
In 2011, losses amounted to €33 million.
In his decision, the arbiter ruled that the behaviour of the service providers was not “fair, equitable and reasonable in the circumstances”. In addition, the arbiter ordered that investors 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.
In May 2011, the bank offered investors to pay them 75c per share. The total buyout of this offer was €45 million while the gross cost was €14.5 million. Of those investors whose interests were handled by Finco Treasury Management, an out-of-court settlement was reached.
BOV has already suffered penalties when the Malta Financial Services Authority ordered fine it €203,000 in June 2012 over its failure to act in the best interest of its investors, as provided for in the terms of the applicable regulatory framework.
In a reaction, BOV said it is in the process of reviewing the details of the arbiter’s decision and the board of directors are in discussions to decide on “appropriate actions to take in the best interests of the bank”.